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Subscribe to FSN E-Commerce Ventures: Choice Equity Broking

Choice Equity Broking has come out with its report on FSN E-Commerce Ventures. The research firm has recommended to ''Subscribe'' the ipo in its research report as on October 26, 2021.

October 27, 2021 / 03:08 PM IST
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Choice Equity Broking IPO report on FSN E-Commerce Ventures

Beauty startup Nykaa, owned by FSN E-Commerce Ventures Ltd. (FSN), is coming up with an IPO to raise around Rs. 5,350cr, which opens on 28th Oct. and closes on 1st Nov. 2021. The price band is Rs. 1,085 – 1,125 per share. The issue is a combination of fresh and OFS. It will not receive any proceeds from the OFS part of the issue. Of the net proceeds from the fresh issue, Rs. 42cr will be used for setting-up new retail stores; Rs. 42cr will be utilized in setting-up new warehouses; Rs. 156cr will be used for the repay/pre-pay certain debt by the company and Rs. 234cr will be used to acquire and retain customers. Residual funds will be used for general corporate purposes.

Valuation and Outlook

There are no peers in the listed space that are engaged in the business similar to that of FSN. At higher price band of Rs. 1,125, the company is demanding an EV/TTM Sales multiple of 21.6x, which seems to be reasonably priced. Considering the growth potential in the beauty & personal space and also the lower e-commerce penetration, we feel that FSN has a huge untapped market. Thus, we assign a “SUBSCRIBE” rating for the issue.

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