Please refer to important disclosures at the end of this report
1
Nykaa is a consumer technology platform, delivering a content-led, lifestyle retail
experience to consumers. The company has a diverse portfolio of beauty, personal
care, and fashion products, including their own brand products manufactured by
them. The company has an Omnichannel experience, online and offline with an
endeavor to cater to the consumers’ preferences and convenience. The different
consumer journeys exist in two business verticals, Nykaa- Beauty and personal care
and Nykaa fashion – Apparel and accessories. Nykaa provides its customers with a
wide variety of products and as of 31st Aug, 2021, Nykaa offered approximately
3.1 million SKUs from 4,078 national and international brands to their consumers.
Positives: (a) One of India's leading specialty beauty and personal care companies.
(b) Major brands offering their products on Nykaa's platform for sale. (c)
Company's advanced technology platform (d) Founder-led company with an
experienced management team.
Investment concerns: (a) Fail to acquire new consumers in a cost-effective manner.
(b) Business depends on the growth of online commerce industry in India &
company ability to leverage technology platform. (c) Business incurred losses in
past which may impact value of equity shares. (d) Changing digital or business
regulation in India.
Outlook & Valuation: The IPO is being valued at price/sales of 21.0-21.8x FY2021
revenues of `2,441 crore. The company has also posted strong revenue CAGR of
48.2% between FY2019-20 despite the Covid crisis and register a profit in
FY2021. While valuations may appear to be expensive on a P/E basis Nykaa is
one of the very few profitable Unicorns in India and we believe that the company is
well positioned to benefit from the exponential growth in the online beauty and
fashion retailing business over the next decade. Hence we believe that that the
valuations are justified and hence we recommend SUBSCRIBE to the issue.
Key Financials
FY2019
FY2020
FY2021
1,111
1,768
2,441
-
59.0
38.1
-25
-16
62
-
-33.4
-479.1
1.8
4.6
6.6
(0.5)
(0.3)
1.3
-
-
848.7
228.0
163.2
107.3
(10.6)
(5.1)
12.6
(1.9)
3.0
11.9
48.1
30.2
21.8
Source: Company, Angel Research.
Note: Valuation ratios at upper price band.
SUBSCRIBE
Issue Open: Oct 28, 2021
Issue Close: Nov 01, 2021
Offer for Sale: `4721.92 cr
QIBs 75% of issue
Non-Institutional 15% of issue
Retail 10% of issue
Promoters 52.6%
Others 47.4%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `47.3cr
Issue size (amount): `5,351.92 cr
Price Band: `1085-1125
Lot Size: 12 shares and in multiple thereafter
Post-issue mkt. cap: * `51,312 cr - ** `53,204 cr
Promoters holding Pre-Issue: 54.22%
Promoters holding Post-Issue: 52.56%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `630 cr
Issue Details
Face Value: `1
Present Eq. Paid up Capital: `46.7 cr
Jyoti Roy
+022 39357600, Extn: 6842
[email protected]
FSN E-Commerce (Nykaa) LIMITED
FSN E-Commerce Venture (Nkyaa)|IPO Note
October 27, 2021
Nykaa Limited | IPO Note
Oct 27, 2021
2
Company background
Company was incorporated as ‘FSN E-Commerce Ventures Private Limited’ on
April 24, 2012. The company was promoted by Falguni Nayar, Sanjay Nayar,
Falguni Nayar Family Trust, and Sanjay Nayar Family Trust. It is digitally native
consumer technology platform, delivering a content-led, lifestyle retail experience
to consumers. Company has invested both capital and creative energy towards
designing a differentiated journey of brand discovery for its consumers.
Issue details
The issue comprises of offer for sale of upto `4721.92 crore and Fresh issue of
`630Cr in the price band of `1085-1125.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
253,365,357
54.2
248,565,357
52.6
Public
213,959,193
45.8
224,359,193
47.4
Total
467,324,550
100.0
472,924,550
100.0
Source: Company, Angel Research & RHP.
Objectives of the Offer
Investment of ₹42 Cr in their subsidiaries, namely, FSN Brands and / or
Nykaa Fashion for funding the set-up of new retail stores.
Capital expenditure of ₹42 Cr to be incurred by the company and of their
subsidiaries, namely, Nykaa E-Retail, Nykaa Fashion and FSN Brands for
funding the set-up of new warehouses.
Repayment or prepayment of outstanding borrowings availed by company
and its Subsidiaries, namely, Nykaa E-Retail amounting to ₹156 Cr.
Expenditure to acquire and retain customers by enhancing the visibility
and awareness of our brands for 234 Cr.
General corporate purpose.
Key Management Personnel
Falguni Nayar is the Founder, Executive Chairperson & Managing Director and
Chief Executive Officer of the company. She has over 26 years of experience in e-
commerce, investment banking and broking. Prior to founding the company, she
was associated with Kotak Mahindra Capital Co Ltd for 18 years where she also
served as a managing director.
Sanjay Nayar is a Non-Executive Director of the Company. He has over 35
years of experience in the banking, and private equity. He was associated with
Citibank N.A. for over 23 years, where he also served as the as chief executive
officer of the bank in India over six years.
Adwaita Nayar is an Executive Director of the Company, since July 1, 2021.
She also serves as the chairperson and chief executive officer of Nykaa
Fashion. She co-founded the Company and has been involved in the areas of
marketing, operations and product development.
Nykaa Limited | IPO Note
Oct 27, 2021
3
Exhibit 1: Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
Total operating income
1,111.4
1,767.5
2,440.9
817.0
% chg
-
59.0
38.1
183.0
Total Expenditure
1,090.9
1,686.5
2,279.5
790.1
Cost of material consumed
0.2
17.3
38.2
22.9
Purchase of traded goods
785.2
1,178.7
1,495.6
550.9
Changes in finished goods and stock-in-trade
-125.2
-181.9
-46.0
-88.5
Employee benefits expense
117.3
195.6
283.6
88.5
Other expenses
313.3
476.7
508.0
216.3
EBITDA
20.5
81.1
161.4
26.9
% chg
-
295.2
99.2
-159.4
(% of Net Sales)
1.8
4.6
6.6
3.3
Depreciation& Amortisation
30.9
59.5
67.1
19.5
EBIT
-10.4
21.5
94.3
7.4
% chg
-
-307.9
337.7
-112.4
(% of Net Sales)
-0.9
1.2
3.9
0.9
Finance costs
26.3
44.3
30.7
9.0
Other Income- Gen
5.0
10.3
11.7
4.7
Recurring PBT
-31.7
-12.4
75.3
3.1
% chg
-
-60.8
-706.1
-104.8
Exceptional item
-
-
-
-
Tax
-7.2
3.9
13.4
-0.4
PAT (reported)
-24.5
-16.3
61.9
3.5
% chg
-
-33.4
-479.1
-106.5
(% of Net Sales)
-2.2
-0.9
2.5
0.4
Basic & Fully Diluted EPS (Rs)
-0.5
-0.3
1.3
0.1
Source: Company, Angel Research
Nykaa Limited | IPO Note
Oct 27, 2021
4
Exhibit 2: Consolidated Balance Sheet
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
SOURCES OF FUNDS
Equity Share Capital
14.2
14.6
15.1
15.5
Other equity (Retained Earning)
216.3
307.6
474.9
683.4
Shareholders’ Funds
230.6
322.1
489.9
698.9
Non-Cont. Interest
0.5
0.7
0.8
0.9
Total Loans
225.6
267.5
187.5
268.1
Other liabilities
78.8
135.5
114.7
123.8
Total Liabilities
535.5
726.0
793.0
1,091.8
APPLICATION OF FUNDS
Property, plant and equipment
42.9
70.1
68.7
79.1
Right of use assets
85.9
144.0
138.9
154.2
Capital work in progress
0.3
0.8
2.0
2.1
Goodwill
0.1
0.1
0.5
0.5
Other Intangible assets
10.6
12.7
23.0
20.8
Intangible assets under development
-
1.2
0.4
1.9
Current Assets
564.0
815.5
963.0
1,248.5
Inventories
244.6
445.3
498.1
591.0
Investments
135.0
-
-
-
Trade receivables
57.9
98.4
76.6
75.7
Cash and cash equivalents
11.4
101.2
83.6
281.8
Bank balance other than CCE
0.5
74.4
164.1
103.9
Other financial assets
51.5
33.3
57.4
79.0
Other current assets
63.0
62.8
83.2
117.2
Current Liability
240.2
398.5
509.0
539.7
Net Current Assets
323.8
417.0
454.0
708.8
Other Non-Current Asset
71.7
79.9
105.5
124.4
Total Assets
535.5
726.0
793.0
1,091.8
Source: Company, Angel Research
Nykaa Limited | IPO Note
Oct 27, 2021
5
Exhibit 3: Consolidated Cash flows
Y/E March (` cr)
FY2019
FY2020
FY2021
Q1FY2022
Operating profit before changes
28.7
89.0
190.3
32.2
Net changes in working capital
-128.4
-78.6
-27.3
-117.2
Cash generated from operations
-99.7
10.4
163.0
-85.1
Direct taxes paid (net of refunds)
0.0
-4.3
-13.2
-28.9
Net cash flow from operating activities
-99.7
6.2
149.8
-114.0
Purchase of property, and others
-34.9
-45.7
-42.1
-16.0
Investment deposits
-0.2
-73.9
-89.7
60.2
Others
-126.8
134.5
2.0
1.9
Cash Flow from Investing (B)
-162.0
14.9
-129.7
46.1
Proceeds from issue of equity shares
0.7
0.5
0.6
0.1
Proceeds from securities premium (net)
133.3
103.2
102.3
202.8
Proceeds from share application
-
0.0
-
0.6
Proceeds from borrowings (net)
-0.2
0.0
1.5
-
Proceeds(repayment) of current borrowings
142.7
41.9
-81.5
80.7
Others
-40.9
-76.9
-60.6
-18.2
Cash Flow from Financing
235.7
68.7
-37.7
266.0
Inc./(Dec.) in Cash
-26.0
89.8
-17.6
198.1
Opening Cash balances
37.4
11.4
101.2
83.6
Exchange effect
0.0
0.0
0.0
0.2
Closing Cash balances
11.4
101.2
83.6
281.8
Source: Company, Angel Research
Nykaa Limited | IPO Note
Oct 27, 2021
6
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
-
-
848.7
P/CEPS
-
-
407.3
P/BV
228.0
163.2
107.3
EV/Sales
48.1
30.2
21.8
EV/EBITDA
2,604.5
658.4
330.2
Per Share Data (Rs)
EPS (Basic)
(0.5)
(0.3)
1.3
EPS (fully diluted)
(0.5)
(0.3)
1.3
Cash EPS
0.1
0.9
2.8
Book Value
4.9
6.9
10.5
Returns (%)
ROE
(10.6)
(5.1)
12.6
ROCE
(1.9)
3.0
11.9
Turnover ratios (x)
Receivables (days)
19.0
20.3
11.5
Inventory (days)
80.3
92.0
74.5
Payables (days)
59.7
64.7
47.3
Working capital cycle (days)
39.7
47.6
38.7
Source: Company, Angel Research
Nykaa Limited | IPO Note
Oct 27, 2021
7
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelone.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.