Nykaa Promoters Set to Sell Up to 1.4% Stake in Block Deal

Recently, Nykaa saw a major jump in its market cap, increasing by Rs.5,187.5 crore following a block deal where 41.4 lakh shares worth Rs.91.2 crore changed hands. Despite the buzz, Nykaa’s shares closed slightly lower at Rs.210.42, even as the broader market nudged up by 0.17%.

Promoters’ Plan to Cash Out

Harindarpal Singh Banga and Indra Banga, key early investors in FSN E-Commerce Ventures Ltd., the parent company of Nykaa, are gearing up to sell up to 4.09 crore shares through a block deal. This sale represents about 1.4% of the company’s total shares. With a floor price set at Rs.198 per share, the sale comes at a 6.27% discount to Nykaa’s last closing price of Rs.210.42 on the NSE.

What the Sale Means

This sale could raise as much as Rs.810 crore (around $96 million) for the Banga family. Managed by Goldman Sachs and JPMorgan, the block deal will trim Harindarpal Banga’s stake in the company from 6.4% to roughly 5%. After the sale, a 45-day lock-up period will prevent any further offloading of shares, which should help stabilize the stock.

Stock Performance

Nykaa’s stock has been on a bit of a roller coaster. While it’s up by 25% year-to-date and 60% over the last year, it’s still down 46% from its listing price. However, the stock hit a 52-week high earlier this week, with a sharp 19% intraday spike. Financially, the company has been doing well, with a net profit of Rs.13.6 crore in the June quarter a 152% jump from the previous year and a 23% increase in revenue, reaching Rs.1,746 crore.

Conclusion: What’s Next? The Banga family’s move to sell a chunk of their stake in Nykaa signals a shift, but they’ll still hold a significant share in the company. Investors and analysts will be keeping a close eye on how this sale impacts the stock, especially as Nykaa prepares for its Annual General Meeting(AGM) on September 18, 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.