FSN E–Commerce Ventures Limited ( Nykaa )

FSN E-Commerce Ventures Private Limited (Nykaa) is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers. Since the incorporation in 2012, they have invested both capital and creative energy towards designing a differentiated journey of brand discovery for the consumers. They have a diverse portfolio of beauty, personal care and fashion products, including the 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. They offer consumers an Omnichannel experience with an endeavour to cater to the consumers' preferences and convenience: They manufacture beauty and personal care products through third party manufacturers contracted by them. They have entered into manufacturing agreements with several manufacturers in India, for the manufacture of such products which are sold under their owned brands such as 'Nykaa Cosmetics', 'Nykaa Naturals' and 'Kay Beauty'. Company owned brands are available on their online and offline channels, as well as for certain brands at third party retailers. Company opened its first physical store in 2014, and has as of August 31, 2021, 80 physical stores across 40 cities. The physical stores currently exist in three formats, Nykaa Luxe, Nykaa On Trend and Nykaa Kiosks and are developed to cater to a specific consumer demographic and need of the local market. As of August 31, 2021, Nykaa Fashion housed 1,434 brands and 2.8 million SKUs with fashion products across four consumer divisions: women, men, kids and home. Within these consumer divisions, they merchandise across several categories including western wear, Indian wear, lingerie, footwear, bags, jewellery, accessories, athleisure, home décor, bath, bed and kitchen in order to cater to the diverse consumers' journeys across the platform. As per financial performance, NyKaa has posted total income/net profits of Rs.1,116.38 cr. / Rs. (24.54) cr. (FY19), Rs. 1777.85 cr. / Rs. (16.34) cr. (FY20), Rs.2452.63 Cr . / Rs. 61.94 cr. (FY21), Rs. 821.71 cr/ Rs 3.52 cr. (Q1 FY22). So company has posted very good growth over last couple of years. They have posted an average EPS of Rs. 0.44 and average RoNW of 2.82% for last 3 fiscals. Issue is priced at a P/BV of 72.72 as per NAV of 15.47 on 30.06.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 859 and if we annualise FY22, then on fully diluted equity post issue P/E is 3776, Which looks very aggressively priced. As per RHP, there are no listed peers in market. On BRLM's front, 6 lead managers are associated with this IPO, and have handled around 86 IPO in last three fiscals. From last 10 IPOs, 6 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 4 are trading below issue price and other are trading above issue price. ( As on 22.10.21) As per financials, Nykaa has shown good growth, RoNW is 12.62% and P/E is around 859 as per FY21 earnings, which looks aggressively priced. Company is in E-Commerce business and its expected to grow at very good rate. Performance of BRLM is average. So, we are giving SUBSCRIBE rating to this IPO and one may apply for long term perspective, but it will be high risk investment.

• 1 Falguni Nayar
• 2 Sanjay Nayar
• 3 Falguni Nayar Family Trust
• 4 Sanjay Nayar Family Trust