Nykaa Rs. 5352 crore IPO To Launch On October 28: Should You Invest?

The much awaited IPO by a women led enterprise has been in news for quite a while and it is set to hit on October 28, 2021. Here is taking you through the various essential details on the company and IPO to help you decide on the investment opportunity:

1. Nykaa:

The company is a content led provider of fashion and lifestyle solution and is the profitable enterprise in the start up industry led by Nayyar. The company is also offering its own manufactured products under the brand. So, since inception in the year 2012, the company has quickly managed to be popular with the masses and offers an omni-channel experience.

As for its engagement, it extends its products both via offline and online channels and as of March 31, 2021 has in total 43.7 million downloads of its mobile app which speaks of its inclusiveness.

2. Positives of the company:

The company caters to the fast growing cosmetics industry that is expected to double to Rs. 2 trillion by 2025 from Rs. 1.1 trillion in Cy 2020.

In the current regime, cosmetic commands just 8% share while it is 12% for the personal care segment and this is highly low compared to other verticals and hence offering a higher room for disruption going ahead.

3. Financials:

The company has benefited from the migration to online mode of shopping during the pandemic and during the period its revenue from operation has grown at a CAGR of 48 percent from Rs. 1111.4 crore in Fy 2019 to Rs. 2440 crore in Fy 21.EBIDTA has grown at a CAGR of 180 percent during the same period. In the Fy 21, the company reported a profit of Rs. 62 crore.

 

4. Issue details:

Issue period- October 28- November 1
Retail quota -10 percent

The company has filed issuance for fresh equity issuance of Rs. 525 crore and an OFS of 4.3 crore shares. The price band for the issue has been kept at Rs. 1085-1125 per share. The company looks at hitting a valuation of US$4 billion. This gives the company a valuation over $7 billion.

5. Issue objective:

Rs. 40 crore for brand positioning as well as offline expansion. The company has over 70 outlets in different formats spanning across the country. Also, the company is foraying to go international.

Capex for Rs. 42 crore for warehouse
Payment of outside borrowings: Rs. 156 crore

Rs. 234 crore for acquiring customers, brand visibility etc.

6. Brokerage take:

The company is sensed to be well positioned to take on the exponential growth expected for the sector as a whole and as it's a profitable unicorn in the country it is seen as a good investment. Nonetheless even as the valuations remain stretched, considering its profits the aspect can be given a miss.

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