FSN E- Commerce Ventures Limited( NKYAA) IPO details – Date, Price, Size, Allotment Status, Subscription

IPO-Note	FSN E- Commerce Ventures Limited
Rs-1085-Rs1125  per Equity share	Recommendation: SUBSCRIBE

Company Profile: –

FSN E-Commerce Ventures (Nykaa) was incorporated in 2012 and has, since, seen rapid growth over the years, to become the largest specialty beauty & personal care platform in India, based on products sold in FY21. It has two major divisions – beauty & personal care (comprising 84% of GMV sales in FY21) and fashion (comprising 16% of GMV sales in FY21) .They have a diverse portfolio of beauty, personal care and fashion products, including their owned brand products manufactured by them. As a result, they have established themselves not only as a lifestyle retail platform, but also as a popular consumer brand. Nykaa offers consumers an Omni-channel experience –

Online: Company’s online channels include mobile applications, websites and mobile sites. As of August 31, 2021, they had cumulative downloads of 55.8 million across all their mobile applications

Offline: Their offline channel comprises of 80 physical stores across 40 cities in India over 3 different store formats as of August 31, 2021

Issue Details
Objects of the issue	·To carry out the Offer for Sale of up to 41,972,660 Equity Shares by the Existing Shareholders; and ·Investment in setting up new stores. ·Repayment or prepayment of outstanding borrowings. ·Expenditure to enhance the visibility and awareness of the brands.
Issue Size	Total issue Size – Rs. 5350Cr. Offer for Sale – Rs. 4720 Cr.
Face value	Rs.1.00 Per Equity Share
Issue Price	Rs. 1085 – Rs. 1125
Bid Lot	12 shares
Listing at	BSE, NSE
Issue Opens:	28th Oct, 2021 – 1st Nov, 2021
QIB	75% of Net Issue Offer
Retail	10% of Net Issue Offer
NIB	15% of Net Issue Offer

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Financial Performance:

Shareholding Pattern:

Shareholding Pattern	Pre- Issue	Post Issue
Promoters & Promoter Group	54.22%	52.56%
Public	45.78%	47.44%

Source: RHP, EWL Research

Strengths:

• One of India’s leading lifestyle focused consumer technology platform and also one of the few Indian unicorns which report profits.

• Nykaa doesn’t have to offer discounts they are borne largely by brands which provides healthy gross margins.

• Being a specialist in the BPC segment, Nykaa can offer much better filters for a product and, therefore, a superior browsing experience.

• Diverse portfolio of owned brands. Nykaa has crafted a portfolio of 15 owned brands

• The company is the preferred destination for luxury and prestige products in India for consumers and brands.

Key Highlights:

• Revenue from operations saw a growth at a CAGR of 48.2 % from FY19-21 and profit growth at a CAGR of 59% from FY 19-21.

• EBITDA Margin improved from 4.59% in FY20 to 6.61% in FY21

• In F.Y21 GMV from beauty and personal care was ₹3380crore and from fashion it was ₹ 665 crore.

• Total borrowing of the company as on 31^st march 2021 is ₹ 187 crore.

• In 1QFY22 company reported profit of ₹ 3.5 crore.

• Net worth of the company in as on 30^th June 2021 is ₹699Crore.

• GMV growth for first 3 month of FY 21 is 238%.

Risk Factors:

• The company has incurred losses in the past and FY21 is the first year where company has made profit

• Nykaa is still facing issues in addressing customers’ complaints efficiently.

Outlook:

Nykaa has gained a significant brand value not only as a lifestyle retail platform but also as a leading lifestyle brand, company has successfully redefined the art of Retailing of Beauty and Personal Care in India. As we have witnessed a shift in the fancy of IPOs from loss-making companies in the recent past and the best example is that of Zomato. This company too falls in that pack of unicorns as it has an e-commerce platform for fashion and personal care products. Based on financial parameters, the valuations are highly stretched and making this an expensive offer.  but considering factors such as increasing PAT, positive cash flows, huge growth capabilities and confidence in the company’s management, Also company has posted strong growth without a substantial cash burn. & has posted profits along with strong improvement in capital turnover ratio to 4.2 times in the FY 21.

At upper end of the price band, the issue is valued at 21.81x EV/ Sales on FY21 financials. we recommend “SUBSCRIBE” rating on this issue.

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