Indian cosmetic product consumers are well aware of what a powerhouse of range Nykaa happens to be. Now as India Tech Desk predicted the startup is all set to take the beauty retailing one notch higher by going public as it files papers with the Securities and Exchange Board of India (SEBI).
The company seeks to raise around Rs 4,000 crore via an initial public offering (IPO), said sources close to the development. In the draft red herring prospectus filed with SEBI, Nykaa has mentioned raising Rs 525 crore via fresh equity and current promoters and investors will be selling up to 43.1 million equities via offer for sale.
According to sources, the company is seeking a valuation between Rs 35,000 crore to Rs 40,000 crore. Those opting to sell via OFS include promoters Sanjay Nayar Family Trust and investors such as TPG Growth IV, Lighthouse India Fund III, Lighthouse India III Employee Trust, JM Financial and Investment Consultancy, Sunil Kant Munjal and others.
Nykaa to focus on increasing its retail presence
A statement released by the company stated that it intends to use the funds raised via fresh equity sale to make investments in its subsidiaries, namely, FSN Brands and Nykaa Fashion, to fund the set-up of new retail stores and fund the set-up of new warehouses.
The balance amount will be used for repayment or prepayment of loans availed by the company, for expenditure to enhance the visibility and awareness of the brand, and for general corporate purposes.
Currently, the company boasts over 1,500 brands in its portfolio, including leading luxury labels like Bobbi Brown, L’Occitane and Estee Lauder. It has even opened 68 brick-and-mortar stores in the country. Nykaa posted revenue of Rs 1,860 crore in FY-20, making it possibly the only profitable unicorn going public
The secret success recipe
Nykaa’s unique selling proposition (USP) is based on French omni-retail leader Sephora and this has also served as an inspiration for Falguni Nayar, the founder. Starting at a time when the Indian market was already abuzz with Flipkart and Amazon, the company owes its success to customers who earlier didn’t have access to this kind of beauty product variety, advice, and unbiased guidance.
Cosmetic purchase was all about going to the local shop where the staff was barely trained. Even if they were, they would be pitching products from one particular brand that they represented. The higher-end brands would often be nested in malls and hi-street retails markets, offering little choice to the consumer.
Founded in 2012, Nykaa hit the break-even point in 2017 and has been growing YoY in profits since then. There has been no looking back. Availing a considerable range and variety of products with an assurance for quality has worked for the company. Another thing that put this cosmetic e-commerce chain ahead of its competitors was Nykaa mini.
Nykaa mini was miniature packages of various beauty products available to the customer under the try and buy model. The small packaging gained massive popularity among the Indian consumers as this practice radiated confidence of quality assurance and gave customers to know the product without spending a fortune.