Lifestyle omnichannel retail startup Nykaa made its blockbuster debut on Indian bourses on Wednesday, with its market capitalization crossing INR 1.04 trillion (USD 14 billion).
Nykaa—the first Indian women-led unicorn to go public—opened for trading on the BSE at INR 2,001, a 78% premium over the issue price of INR 1,125, while on the NSE, it began trading at INR 2,018, surging 79%. The company’s shares rose as much as 98% to reach an intraday high of INR 2,235 on both stock exchanges.
By 1:50 pm, Nykaa was trading at a premium of about 96%. For context, high-profile food-delivery giant Zomato, which became the first internet unicorn in the country to go public earlier this July, listed its shares at a premium of around 52% at a market cap of USD 13 billion.
Nykaa’s promoters (those involved in the formation and incorporation of the company)—the husband-wife duo, Falguni Nayar and Sanjay Nayar—through six trusts, own over 54% stake in the company. This means they now have a net worth of over USD 7 billion, which probably makes Falguni India’s richest self-made woman billionaire.
Nykaa saw strong demand for its shares during the three-day initial public offering (IPO), which closed on November 1. With its public offer being subscribed almost 82 times, the Mumbai-based company raised INR 53.52 billion (USD 721 million).
The offer received bids for 2.16 billion equity shares against the issue size of 26.4 million shares. The portions reserved for qualified institutional investors and the non-institutional buyers were subscribed 91.18 and 112 times, respectively, while the retail investors’ quota was booked over 12.24 times.
Nykaa’s IPO comprised fresh issuance of equity shares worth INR 6.3 billion and an offer for sale of INR 47.2 billion by existing shareholders. The company had fixed the price band of INR 1,085–1,125 apiece for the IPO, eyeing a valuation of over USD 7.1 billion.
Nykaa will utilize the IPO proceeds to set up new retail stores and warehouses, as well as for debt repayments and marketing. Aside from that, the company also plans to expand internationally in markets like the Middle East and Europe.
Founded in 2012 by Falguni, a former investment banker, Nykaa is one of the few profitable local startups to make a public debut. It reported a net profit of INR 619.6 million for the financial year (FY) ending March 2021, compared to a net loss of INR 163.4 million the year before. Meanwhile, its consolidated revenue grew 38% to INR 24.5 billion.
The nine-year-old direct-to-customer (D2C) lifestyle retailer currently has over 80 physical stores across 40 cities. As of August 31, 2021, Nykaa had about 3.1 million SKU offerings from 4,078 national and international brands across its two business verticals—beauty and personal care (BPC) and fashion.
According to a recent note by Motilal Oswal, an Indian research and brokerage firm, Nykaa is India’s largest BPC platform, with almost 35% of the online BPC market, which constitutes about 8% of the country’s overall BPC market. The fact that the Indian BPC market is set to grow to USD 26 billion by 2025 from USD 15 billion last year implies that “Nykaa is well-placed to lead the online market growth with a proven business model.”
“We like Nykaa given its leadership position in the online BPC market, customer-centric approach, profitable tech platform, and capital-efficient business model,” the brokerage firm said. “We believe Nykaa is rightly placed to tap the high-growth online penetration in the BPC and fashion markets.”