Shares of FSN E-Commerce Ventures (Nykaa) fell 7 percent in intra-day deals on Thursday after the one-year lock-in period on pre-initial public offering (IPO) investors ended today (November 10).
During a lock-in period, promoters and investors who bought shares before the IPO cannot liquidate the shares held by them. Almost 67 percent of Nykaa’s shareholding or around 31 crore shares will be released from lock-in today. Private equity funds and high networth individuals (HNIs), who were early investors in the company will now be able to sell their shares.
These include Steadview Capital Mauritius, TPG Growth, Lighthouse India Fund, and HNIs like Harindarpal Singh Banga, Narotam Sekhsaria and Sunil Kant Munjal. Promoter Falguni Nayar and family, who holds 32.4 percent or 14.5 crore shares can also liquidate.
The stock shed as much as 7.1 percent to it's day's low of ₹166.85. It also fell 6 percent in yesterday's session ahead of the lock-in expiry.
The company's board has also approved the issuance of bonus equity shares of the company in the ratio of 1:5 i.e., the company will issue a bonus of 5 shares for every 1 share held as on the record date (November 11).
The stock has lost over 47 percent in 2022 year-to-date (YTD) and has tanked 57 percent from its record high of ₹2,574, hit on November 26, 2021, its listing date.
Last week, global brokerage HSBC said it sees Nykaa as the structural winner of large-scale beauty and personal care (BPC) and lifestyle opportunities.
According to HSBC, the stock has corrected partly due to the global tech sell-off on rising yields and more recently due to the imminent lock-in expiry (10 Nov). The brokerage believes the valuation is now even more appealing and under-appreciates the structural growth opportunity in beauty and personal care.
It further believes BPC and e-commerce are the perfect match and expects a 30 percent CAGR for the BPC e-commerce market in the coming decade, followed by a subsequent decade of double-digit growth.
In the September quarter, Nykaa posted a 344 percent year-on-year (YoY) jump in its September quarter net profit at ₹5.2 crore vs ₹1 crore in the year-ago period. Meanwhile, its quarterly revenue from operations recorded a 39 percent YoY increase to ₹1,230.8 crore from ₹885 crore in Q2FY22.
"During the quarter, we continued to demonstrate strong GMV growth with improvement in gross margin, efficiency in fulfillment and marketing cost lead to improvement in EBITDA margin YoY," Nykaa said in an exchange filing.
