Indian startup Nykaa’s blockbuster stock market debut values it at $13 billion

Shares of Nykaa, India’s cosmetics-to-fashion platform, made a blockbuster debut valuing the company at close to $13 billion.

With the news reaching the market, shares of FSN E-Commerce Ventures, the profit-making parent company that owns the Nykaa brand, soared by 89.2% to 2,129 rupees after opening at 2,018 rupees in pre-open trade.

Its listing price was at a 79.4% premium to the initial public offering (IPO) price of 1,125 rupees, giving the company a valuation of $12.86 billion (954.37 billion rupees).

Last week, the company’s offering drew bids worth $32.55 billion, oversubscribing it by nearly 82 times, signaling a strong investor demand for a startup that, unlike its peers, has already achieved profitability. 

“Nykaa has a seen a strong listing due to positive market sentiment … since it is the only profit-making company in the digital space, it is receiving higher investor traction,” said Ajit Mishra, vice-president, research, Religare Broking.

He went on to add, the “startup’s valuations look expensive at these (levels) despite factoring in strong long-term growth prospects”.

Many high-profile Indian startups are slated to enter the primary market with IPOs, including SoftBank-backed hotel aggregator Oyo, Ant Group-backed fintech Paytm, ride-hailing firm Ola and logistics provider Delhivery.

Nykaa’s listing comes at a time when companies are seeking to capitalize on the Indian stock market that has scaled record highs on the back of declining COVID-19 cases, reopening of the economy and sufficient liquidity.

Nykaa, which functions in two broad segments, beauty and personal care, and apparel & accessories, was incorporated in 2012; it has swiftly became a popular name among Indian consumers.

Its backers includes private-equity firm TPG, Indian celebrities Katrina Kaif and Alia Bhatt and Fidelity.

As of August 31, 2021, Nykaa runs its online operations through mobile applications and websites along with 80 brick-and-mortar stores across India.

($1 = 74.1900 Indian rupees)

Categories: Creativity, Entrepreneurship, HR & Organization, Strategy

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