The story of Nykaa

Fun Fact on Nykaa

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About Nykaa

Nykaa has hogged a lot of limelight as it will be the first Indian beauty retailer to list on the exchanges and it is profitable too! (FY21 and 6MFY22 was profitable, not earlier)

Incorporated in 2012 – they have evolved from a beauty retailer to a lifestyle focused technology platform

80 physical stores across 40 cities in India over three different store formats as of August 31, 2021,  

They do not control the pricing strategies of sellers and brands and typically contract on a non-exclusive basis.

They rely on third-party couriers, such as Aramex, Blue Dart, Delhivery, Ecom Express, ExpressBees, and Shadowfax to deliver orders from their warehouses to consumers.

They have a diverse portfolio of beauty, personal care, and fashion products, including their own brand products. 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.

As of August 31, 2021, – 3.1 million SKUs from 4,078 national and international brands to consumers across business verticals. Portfolio of 15 owned brands.

In FY21 and the 5M ended Aug 31, 2021, they hosted 658.9 million, and 369.6 million Visits on their beauty and personal care websites and mobile applications.

Online Channel

Mobile applications, websites, and mobile sites. As of August 31, 2021, cumulative downloads of 55.8 million. 88.2% of online GMV came through mobile apps. They have one of the highest share of mobile application-led transactions, among the leading online retail platforms in India

Offline Channel

80 physical stores across 40 cities in India over 3 different store formats as of August 31, 2021.

Offline Store Formats

#1 – Nykaa Luxe – Average 1134 sq feet in size. Present in A-grade malls and high streets. showcases luxury beauty experience. 38 Nykaa luxe stores.

#2 – Nykaa on-trend – Average 732 sq feet in size. Showcases current best-selling products across beauty and personal care brands. 32 Nykaa on-trend stores.

#3 – Nykaa Kiosks – Free-standing units in the atriums of Shopping Malls. Showcases Nykaa owned brands. 9 such Kiosks.

2 Main Verticals –

Beauty and Personal Care Offering

256,149 SKUs from 2,644 brands primarily across make-up, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories as of August 31, 2021.

Fashion Offering

Launched in 2018. As of August 31, 2021, 1,434 brands and 2.8 million SKUs with fashion products across four divisions: women, men, kids and home. Within these consumer divisions, we merchandise across several categories including western wear, Indian wear, lingerie, footwear, bags, jewelry, accessories, athleisure, home décor, bath, bed, and kitchen in order to cater to the diverse consumers’ journeys across our platform. We offer a mix of brands across established national brands, international brands, luxury brands, and emerging labels and designers.

Tie-ups/Relationships with Brands

They have longstanding relationships with many of their key brand vendors such as Elca Cosmetics Pvt Ltd, Hindustan Unilever Limited, Honasa Consumer Products Pvt Ltd, Huda Beauty FZ LLC and L’Oreal India Private Ltd.

Issue Details

Objects of Issue

Shareholding Pattern (as of RHP Date)

Nykaa Prive – consumer loyalty program

For beauty and personal care vertical, members enjoy exclusive offers and discounts, complimentary gifts, free shipping, and access to exclusive members’ only content. Nykaa Prive members also enjoy priority access to consumer service team.

As of FY21, there were 2.1 million Nykaa Prive members.

Content Platform – Nykaa TV

In the Financial Year 2021 and for the five months ended August 31, 2021, Nykaa TV, a YouTube-based content platform, had a watch time of 1.3 million hours and 1.5 million hours, respectively, and content posted on Instagram and Facebook (including videos, reels, posts, and stories) was 39,498 posts and 17,346 posts, respectively.

They are one of the most influential lifestyle platforms in India with approximately 13.4 million followers across leading social media platforms as of August 31, 2021.

Order Details

The share of the prepaid orders has increased from 42.3% in Financial Year 2019 to 52.2% for the five months ended August 31, 2021. The contribution to GMV sales in Tier 2 and Tier 3 cities collectively has also increased from 56.9% in Financial Year 2019 to 64.0% in Financial Year 2021 and was 62.6% for the five months ended August 31, 2021.

Above due to online buying

Little bit of operational efficiency achieved

The Above image is interesting as it shows that they have a very sticky customer base!

Small Pledge

Key Operating and Financial Metrics


The company is distinguished in the fact that it is profit-making and it is completely owned by the Nayar family. FY21 and Q1FY22 have been profitable. Revenue and EBITDA CAGR have been great.

Q1FY22 financials also looked ok, but can’t judge anything on a qtr or extrapolate it

Valuation & Conclusion

FY21 – EPS Rs 1.34 | RoE – 12.62% | BV – 15.5 (as of June 2021)

P/E – 839.5x

Price to Sales – 21.6x on FY21 sales, 16.2x on FY22A Sales

Market Capitalization post listing – 53204 Cr

Nykaa’s valuations at the upper price band of Rs 1125 come out to be 839.5 times price to earnings and 21.6 times FY21 sales and 16.2 times FY22 Annualized sales.

Now, of course, looking at the above valuation metrics, it is clear that the valuations are expensive. However, unlike other startup listings this year, Nykaa has declared profits, is led by an exceptional promoter and promoter Group (Falguni Nayar and her family). They have grown in a way so as to create a sustainable business enterprise keeping profitability in mind.

Going ahead, the company is expected to do well in the market of beauty products. We expect operational efficiencies to kick in too given how the major CAPEX has been done majorly on the company foundation side. One should just be aware that the current valuations may mean that the stock may not move anywhere for a long period of time despite good business performance. We have a ‘Subscribe’ on Nykaa IPO for the very long term, the exception being if anything fundamentally changes.

About the Industry

Large market opportunity aggregating ₹10.6 trillion (US$152 billion) in the growing beauty, personal care, and fashion industry by the calendar year 2025 in India.

The Indian beauty and personal care market is estimated to grow to approximately ₹2.0 trillion (US$28 billion) by the calendar year 2025 from ₹1.1 trillion (US$16 billion) in the calendar year 2020.

The Indian fashion market is estimated to grow to approximately ₹8.7 trillion (US$124 billion) by the calendar year 2025 from ₹3.8 trillion (US$54 billion) in the calendar year 2020. (Source: RedSeer Report)

Thanks for reading till the end!

If you would like to add anything or give any feedback or would like to appreciate the article, reach out to me on Twitter – aditya_kondawar or email me at [email protected]!

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