Shares of FSN E-Commerce Ventures (Nykaa) soars nearly 20 percent on Friday (November 12) as the stock went ex-bonus yesterday. The company's board had 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).
On the back of the bonus issue, foreign portfolio investors bought shares sold by the pre-IPO shareholders and investors after its one-year lock-in ended yesterday (November 11).
The stock surged as much as 19.5 percent to its day's high of ₹224.65. Just in November so far, the scrip has surged over 13 percent after 6 straight months of losses. It fell over 9 percent in October and 8.5 percent in September.
On a YTD basis, the stock is still down nearly 40 percent and over 50 percent from its all-time high of ₹428.95, hit on listing day (November 26).
As per a report by Economic Times, foreign investors such as Segantii India Mauritius, Government Petroleum Fund, and Aberdeen Standard Asia Focus Fund bought some of the shares sold by a few pre-IPO shareholders following the expiry of the one-year lock-in period.
Pre-IPO investors Narotam S Sekhsaria, Mala Gopal Gaonkar, and Lighthouse India Fund, sold Nykaa shares worth ₹256 crore, ₹69 crore, and ₹166 crore, respectively, through block deals, it added. According to the bulk deals data, three pre-IPO investors sold shares worth ₹491.35 crore, while Segantii, Norway's Government Petroleum Fund, and Aberdeen bought shares worth ₹208 crore.
Bonus shares are free shares given to current shareholders by the firm. Bonus shares are distributed in proportion to the number of shares held by an investor.
When a firm provides 1:5 bonus shares, for example, it implies that for every 5 shares purchased, the shareholder will receive 1 free share. As a result, if an investor owns 100 shares at the time of the bonus, his or her holdings will increase to 120 shares.
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 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.
Its EBITDA improved to ₹61 crore vs ₹28.8 crore in the year-ago period while the EBITDA margin improved to 5 percent vs 3.3 percent in Q2 FY22.
The company also noted that the consumer demand for premium beauty, personal care and wellness is showing signs of buoyancy as we gear up for a promising H2 FY23.
