Nykaa shines on D-Street debut; market cap crosses Rs 1 trillion

FSN E-Commerce Ventures, the parent entity of beauty start-up Nykaa, saw its market value nearly double to over Rs 1 trillion ($13 billion) during its market debut on Wednesday. Shares of the company rose 96 per cent over its initial public offering (IPO) price of Rs 1,125 to close at Rs 2,207 apiece.

Nykaa, founded by Falguni Nayar, a former investment banker, is India’s first unicorn led by a woman. The strong debut has made Nayar, who owns a 54 per cent stake in the company, the country’s richest self-made female billionaire.

“A good market reception is very encouraging,” said Nayar, chief executive officer of She said her entrepreneurial journey to build started at the age of 50. “Hope this inspires other women entrepreneurs to be the ‘Nykaa’ (heroine in Sanskrit) in their own life.”

has joined food delivery firm Zomato in the exclusive Rs 1-trillion-plus market cap club of listed start-ups. Paytm, whose Rs 18,300-crore IPO closed on Wednesday, would soon join the club. Overall, Nykaa will be the 55th listed company in the Rs 1-trillion-plus club, ahead of firms like Godrej Consumer and Britannia.

Nykaa’s Rs 5,352-crore IPO was subscribed 82 times, the most among large start-up IPOs.

Experts said the backing India’s internet start-ups are getting from the public demonstrates the maturity and depth of the domestic capital markets and is an encouraging sign for the large start-up ecosystem.

Investors, they said, are looking at Nykaa as a play on expected growth in online beauty and personal care (BPC). Currently, India’s online BPC market is highly under-penetrated at just 8 per cent, despite growing at 60 per cent per annum in the past five years, they said.

“Nykaa is the first-of-its-kind listing in the e-commerce space and thus garnered a lot of interest, validated from IPO subscription of 82x. Apart from leadership in online BPC, Nykaa is also one of the fastest growing fashion platforms in India based on GMV (gross merchandise value). Nykaa’s key strength lies in its inventory-led business model for the BPC segment, which allows it to offer authentication for all its products and ensures availability and efficient distribution,” said Sneha Poddar, AVP of retail research at Motilal Oswal Financial Services.

Analysts said investors are also drawn to Nykaa’s unique traits that are rare among start-ups. For one, the company is profitable and has a large promoter shareholding.

“At 54 per cent, Nykaa’s promoter shareholding is among the highest in the start-up ecosystem. This means that the promoter’s fortunes are closely tied to the company. Besides, the company’s shareholding is dominated by domestic investors, which also breaks the stereotype that you need large foreign investor backing to be successful,” said an investment banker requesting anonymity.

Nykaa had reported a net profit of Rs 62 crore for the financial year 2020-21 (FY21) on revenues of Rs 2,440 crore and GMV of $540 million. Through its IPO, Nykaa has raised Rs 630 crore, which will be used to increase its brand awareness, setting up of new retail stores and warehouses, and to repay its debt.

The remaining Rs 4,722 crore was an offer for sale. Among the selling shareholders were promoter Sanjay Nayar Family Trust, TPG Growth, Lighthouse India Fund, and JM Financials.

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