Nykaa’s initial public offering (IPO) has received a strong response from the investors in the first three days. The Rs 5,352-crore public issue was over subscribed was subscribed 9.7 times by November 1, the final day of bidding of the issue. Investors made bids for 25.68 crore equity shares against the total issue size of 2.64 crore equity shares on till now, according to the data available from the National Stock Exchange (NSE). The overwhelming response from retail investors helped Nykaa IPO sail on the first day of bidding. The quota set aside for retail investors was subscribed 6.3 times bids while the portion reserved for qualified institutional buyer (QIB) was booked 4.8 times. The quota for high net-worth individual (HNI) was subscribed 4.2 times.
Investors can book Nykaa IPO till Monday, November 1. The online beauty product seller has fixed the price band at Rs 1,085-1,125 per equity share. On valution of the company, Ventura Securities said, “Nykaa is the largest specialty beauty and personal care platform in India in terms of value of products sold in FY21. The mobile phone space in India has been significantly disrupted by smartphones in the last 5-6 years, driven by availability of low-cost alternatives from local as well as global brands. By 2025, India is expected to have 75-85 crore smartphone users implying a smartphone penetration of 52- 59 per cent. Consumer spending on essential health and wellness products is on the rise. Beauty and personal care products and appliances for at-home grooming are also seeing a higher demand,” said Pratik Prajapati, Anand Rathi Communications.
The company at the upper band of the IPO is offered at 21.6x price to sales for FY21. The valuation of the IPO is rich, demanding a market cap of Rs 53,204 crore. There are no listed companies in India that engage in a business similar to that of the company. Accordingly, the company has a unique business proposition amongst its customer base and also has an aspirational brand image which augurs well for the company in the long term.”
Nykaa IPO comprises a fresh issue of Rs 630 crore and an offer for sale (OFS) of 4.19 crore equity shares by several shareholders, including the promoters and some investors. Promoters Sanjay Nayar Family Trust will sell up to 48 lakh equity shares through OFS, and investors TPG Growth IV SF Pte Ltd and Lighthouse India Fund III will dilute 54.21 lakh equity shares and 48.44 lakh equity shares, respectively. Yogesh Agencies & Investments Pvt Ltd, will sell 25.38 lakh equity shares and JM Financial and Investment Consultancy Services will offload 9.14 lakh equity shares. Other shareholders – Lighthouse India III Employee Trust, Sunil Kant Munjal, Harindarpal Singh Banga, along with Indra Banga, Narotam Sekhsaria, Rishabh Mariwala, Jeenoo Khakhar, along with Kanika Khakhar and Isha Khakhar, Michael Carlos, Samina Hamied, Sanjay Maliah, Vikram Sud, and Karan Swani will also sell 2.34 crore equity shares.
The unlisted stocks of Nykaa was trading at Rs 570 on the grey market on Monday. Nykaa shares were fetching a grey market premium of Rs 1,695, up by more than 50 per cent over the higher end of the issue price of Rs 1,125 on November 1. However, Nykaa’s grey market premium has slipped in the last few days.
“With a diverse assortment of beauty, personal care and fashion products, Nykaa’s supremacy lies in its ability to retain and attract customers. Nykaa has witnessed sustained growth in GMV over the years and has the highest AOV. It’s robust technology and content engine, focus on capital efficiency and positive unit economics coupled with immense headroom for penetration, provide the company a long runway for growth. The dearth of PAT positive new age companies in India and it’s first mover advantage augurs well enabling Nykaa to command higher premium. We believe the company is capable of improving its financial metrics and cementing its position going forward and hence recommend investors to Subscribe to the issue,” said Yesha Shah, head of equity research, Samco Securities.
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