Nykaa IPO: Everything you need to know

This article talks about everything that you need to know before applying for Nykaa’s IPO.

Founded in 2012, by Falguni Nayar, Nykaa (FSN E-Commerce Ventures Private Limited) is a digitally native consumer technology platform, delivering a lifestyle retail experience to individuals. Nykaa is operating in the retail industry segment known as Beauty & Personal Care (BPC). In India, this retail segment has witnessed continuous growth, and it accounts for about 35% of the discretionary retail industry. With the sector being in a boom, this is the right time for Nykaa to come up with their Initial Public Offering (IPO). The IPO is slated to open for subscription on October 28, 2021. If you are confused about whether to apply for this IPO or not, this article may guide you to a sound decision.

Industry Overview

Nykaa operates in the BPC segment of the retail industry through both online & offline channels. In the year 2016, a mere 11% of India’s retail industry was organized. This has increased to 20% in 2020, due to improved logistics infrastructure, and a decrease in internet cost. The retail industry in India is expected to grow at a CAGR of 11%. More specifically, the BPC segment is expected to grow at a CAGR of more than 12%. The online retail growth within BPC is growing at a whopping CAGR of 30%. The reason behind such high growth of online markets is the emergence of trust among customers and large catalogs of products. Another market that Nykaa is foraying into is the Fashion industry. In the fashion industry too, the share of organized retail has jumped from 29% in 2016, to 38% in 2020. There is also a shift of demand from offline to online providing companies like Nykaa a boost. The online fashion sector witnessed growth at a CAGR of 25% in the last few years. The accelerating growth in both the segments of the retail industry, BPC, and Apparel & Fashion means that Nykaa has a huge target market of over $150 billion over the next few years. But such rapid growth in this sector has also attracted players such as Amazon, Flipkart, Myntra, etc., all of which will directly compete with Nykaa for the market share in this growing segment.

Nykaa Overview

Nykaa was incorporated by Falguni Nayyar in the year 2012 as an omnichannel vertical e-commerce company. Nykaa operates through both online and offline channels and offers a diverse portfolio of products including beauty & personal care, fashion, and its own-brand products. Currently, Nykaa has around 76 offline stores operating in 38 cities and its online channels include its websites and mobile app. Nykaa majorly has 2 business verticals namely Nykaa BPC and Nykaa Fashion. Nykaa retails over 2,500 brands across BPC and fashion segments. Today, Nykaa has emerged as the undisputed market leader in Beauty and Personal Care (BPC) products in India. Nykaa also has an edge as compared to other e-commerce firms as BPC products like cosmetics have the highest mark up of any consumer product in the world, and Nykaa seems to specialize in this segment. Nykaa began as an omnichannel BPC business and is now transforming itself into a lifestyle platform. Nykaa widely uses a wide variety of ways to generate content and it has deployed various technologies to personalize this content for its customers. Nykaa outclasses two major changes happening within the e-commerce industry, social commerce, and live stream commerce. Nykaa never shies away from new experiments and is at forefront of running some on them as of 2021, including Nykaa Man, Nykaa Pro, The Global Store, and Superstore.

Going by the industry and Nykaa’s overview, the IPO seems to be promising. But before we conclude, let’s have a look at the company’s financials.

Nykaa’s Financials

  • Sales & CAGR: The annual sales at Nykaa have compounded at a CAGR of 84% since 2017. Nykaa has been working on an inventory-led model, under which it buys the products from various suppliers based on the demand and then sells them to customers via their platform. Around 90% of Nykaa’s revenue comes from this channel. The remaining 10% of the revenue is generated through offering marketing support to brands and the shipping charges from the customers.
  • Profits and Margins: Nykaa’s gross margin remained steady at around 40% while its EBITDA margins have improved from -23% in 2017 to 6.6% in 2021. Nykaa closed the FY 2021 as its first year of PAT (Profit After Tax) breakeven.
  • Cash-flow: Nykaa’s cash flow has significantly improved over the years and it generated around Rs. 1,498 million positive cash during the FY 2021. Turning cashflow position is a rarity in the e-commerce industry, but Nykaa successfully turned both Cash Flow from Operations and Free Cash Flow positive over a relatively shorter time span.
  • Debt: Nykaa’s net debt to equity ratio has reduced at a great pace through its recent funding rounds. The total debt of the company stood at Rs. 1,875 million in FY 2021 as compared to Rs. 2,256 million in FY 2019.
Revenue Profit Total Assets
2019 Rs. 1,116 crores (Rs. 25 crores) Rs. 776 crores
2020 Rs. 1,778 crores (Rs. 16 crores) Rs. 1,124 crores
2021 Rs. 2,453 crores Rs. 62 crores Rs. 1,302 crores

Details of the IPO

IPO Opening Date October 28, 2023
IPO Closing Date November 01, 2023
Issue Size Rs. 5,351.92 crores

(Fresh Issue: Rs. 630 crores, &

Offer for Sale: Rs. 4,721.92 crores)


Price Band Rs. 1,085 – Rs. 1,125 per equity share
Face Value Rs. 1 per equity share
Market Lot Size 12

(Minimum Investment: Rs. 13,500, &

Maximum Investment: Rs. 1,89,000)

Issue Type Book Building Issue
Listing At BSE, NSE

Important Tentative Dates:

IPO Open Date October 28, 2023
IPO Close Date November 01, 2023
Basis Allotment Date November 08, 2023
Initiation of Refunds November 09, 2023
Credit of shares to Demat Account November 10, 2023
IPO Listing Date November 11, 2023

Competitive Strength of Nykaa

  • Nykaa has emerged as one of the leading lifestyle-focused consumer technology platforms in India.
  • Nykaa has become a preferred destination for luxury and prestige products in India for both consumers and brands.
  • Nykaa is a capital-effective business and has shown strong growth and profitability. It is one of the only few startups to have turned cash positive and profitable in such a short time span.
  • Nykaa has a strong online presence through its advanced technology platform, and it has been expanding its offline business rapidly as well. It has a proprietary stack that has been evolved keeping in mind today’s challenges.
  • Nykaa has a strong and experienced promoter and professional management group. Also, being a founder-led company gives it an edge over other companies.

Risk Factors in the IPO

  • Regulations: The biggest risk faced by Nykaa is the impending regulation by the Ministry of Consumer Affairs. E-commerce platforms are under scrutiny for selling their private label merchandise. The government of India may ban the platforms from selling their private-label goods. This ban will adversely affect Nykaa’s investment in its own private label brand.  Nykaa owns a portfolio of 13 private label brands as of 2021.
  • Increasing Competition: Nykaa is facing increased competition from new vertical e-commerce players. Nykaa is facing competition from new startups as well as established companies. Myntra recently announced its entry into the BPC segment.
  • Lack of Control: Nykaa usually lacks control over the quality of the products offered by sellers and brands on its platform. This may lead to legal liabilities and reputational harm because of product defects, poor quality, or authenticity issues.


Nykaa’s IPO represents a significant milestone for the Indian startup ecosystem. Nykaa’s IPO is only the second IPO by a unicorn startup after Zomato. Successful and profitable companies like Nykaa are rare in the omnichannel retail platform. One of the biggest strengths of Nykaa is Falguni Nayyar, the founder of the company, who has immense ability to carry the company forward to greater heights. No doubt, there may be challenges along the journey for Nykaa, but no one would like to miss upon the opportunity to invest in such a company with great potential for future growth. Further, the performance of Nykaa’s IPO shall remain significant for other unicorn startups lined for their IPOs in the near future.