Nykaa mcap falls below Rs 1-trn mark; stock down 5%, sheds 18% in a week

Shares of FSN E-Commerce Ventures (Nykaa) continued to reel under the selling pressure, falling another 5 per cent in to Rs 2,040.60 on the BSE in Wednesday’s early morning trades amid fears of selling by anchor investors, owing to the end of the lock-in period. The stock of fashion and cosmetics online retailer was trading lower for fifth straight day, falling 18 per cent in one week. In comparison, the S&P BSE Sensex was up 2 per cent during the same period.

A sharp decline in stock price of the company, has resulted in the market capitalisation of Nykaa fall below Rs 1-trillion mark. At 09:25 am, the stock was trading 4 per cent lower at Rs 2,060, with a market capitalisation of Rs 97,423 crore, the BSE data showed.

FSN E-Commerce Ventures, more commonly known as Nykaa, is a consumer technology platform, delivering a content-led, lifestyle retail experience to consumers through its diverse portfolio of beauty, personal care & fashion products including their own brand products.

Nykaa had made a strong stock market debut as the shares ended at Rs 2,207, a hefty 96 per cent premium over its issue price of Rs 1,125 per share, on the BSE. The stock has corrected 21 per cent from its high of Rs 2,574 hit on November 26, 2021. The stock hit a low of Rs 1,994.10 on its listing day i.e. November 10, 2021.

The lock-in period for anchor investors gets over today, on Wednesday, December 8. The company had raised Rs 2,396 crore from anchor investors ahead of its initial share-sale last month. The company had allocated a total of 21.23 million equity shares to anchor investors at Rs 1,125 a share, aggregating to Rs 2,396 crore.

Out of the total allocation of 21.23 million equity shares to the anchor investors, 7.09 million equity shares (i.e. 33.33 per cent of the total allocation to anchor investors) were allocated to 21 domestic mutual funds through a total of 93 schemes.

Nykaa's net profit fell 96 per cent to Rs 1.1 crore in the September quarter on a year-on-year (YoY) basis and 69 per cent, compared with the June quarter. Revenue from operations grew 47 per cent YoY at Rs 885 crore.

Nykaa's marketing and advertising expenses grew 286 per cent to Rs 121 crore in the September quarter, compared with Rs 31.5 crore in the year-ago period. The company said marketing and advertisement expense were higher on account of mass media marketing campaign aimed at building brand awareness and higher customer acquisition costs to acquire new customers. However, the company said its gross profit margin improved 345 basis points to 42.7 per cent in the September quarter.

The company's business depends on the growth of online commerce industry in India and its ability to effectively respond to changing user behaviour on digital platforms.