01 Nov , 2021 By : Kanchan Joshi
The initial public offering (IPO) of FSN E-Commerce Ventures Ltd, which runs online marketplace for beauty and wellness products Nykaa, was subscribed 4.86 times excluding the anchor book on Friday. Ahead of its IPO, Nykaa raised Rs2,396 crore from anchor investors. The issue was fully subscribed on the first day of the sale.
As of 11:25 am on day 3, Nykaa IPO has been subscribed 6.51 times with retail category booked 8.84x, NIIs 8.45 times, QIBs 4.86 times and employees reserved bid 1.48 times, BSE data showed.
The IPO comprises fresh issue of equity shares worth Rs630 crore and an offer for sale (OFS) of 41,972,660 equity shares by promoter and existing shareholders.
As per market observers, Nykaa shares are available at a premium (GMP) slipped from previous day but still remains strong around Rs570 in the grey market today. The company's shares are expected to list on leading stock exchanges NSE and BSE on November 11.
“Looking after scale of operations, strong management team, profitable concern & high growth prospectsin industry due to large under penetration, we believe that company has created an industry itself. Therefore, we recommend “Subscribe" on issue for listing gain as well as long term," suggested Hem Securities.
Founded in 2012 by former investment banker Falguni Nayar, as of August 31, 2021, Nykaa had cumulative downloads of 55.8 million across all their mobile applications. Nykaa had posted a net profit of Rs61.9 crore in FY21 compared to a loss of Rs16.3 crore in FY20. Nykaa opened their first physical store in 2014, and has 80 physical stores across 40 cities as of August 31, 2021.
The company plans to use the proceeds from the IPO for expansion, by setting up new retail stores and establishing new warehouses. It also plans to retire some of its debt, which should bring down interest costs and further shore up its profitability.
Brokerage firm Prabhuas Lilladher has recommended a ‘Subscribe’ Rating to IPO of FSN E-Commerce Ventures which operates Nykaa. “We believe Nykaa’s entry into fashion segment holds promise with focus on premium customers, curated and managed marketplace offering over 1.8 million SKUs, private labels like NYKD, Pippa Bella, 20 dresses and industry leading AOV of Rs3977 and ~25% contribution to GMV in 5MFY22," the note stated.
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