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Company Background

FSN E-Commerce Ventures Limited (“Nykaa”) was incorporated on April 24, 2012. Nykaa is a digitally native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers. They have a diverse portfolio of beauty, personal care and fashion products, including their owned brand products manufactured by them.

Distribution Channels –

Online: 88.2% of their online GMV came through mobile applications; Nykaa has have one of the highest share of mobile application-led transactions, among the leading online retail platforms in India during FY21

Offline: Their offline channel comprises of 80 physical stores across 40 cities in India over different store formats as of August 31, 2021. Their physical stores currently exist in 3 formats, Nykaa Luxe, Nykaa On Trend and Nykaa Kiosks

Business Verticals –

 Nykaa: Beauty and personal care

 Nykaa Fashion: Apparel and accessories

As of August 31, 2021, they offered approximately 3.1 million SKUs from 4,078 national and international brands to consumers across business verticals. In the FY21, the total GMV was ₹40,459.8 million, which grew 50.7% from the FY20. They have entered into manufacturing agreements with several manufacturers in India, for the manufacture of such products which are sold under their owned brands such as “Nykaa Cosmetics”, “Nykaa Naturals” and “Kay Beauty”. Their owned brands are available on their online and offline channels, as well as for certain brands at third party retailers.

Nykaa Fashion - The average value of orders on Nykaa Fashion mobile application and website was ₹3,977 for the 5 months ended August 31, 2021. The average value of orders on the Nykaa Fashion mobile application and website is the highest among leading online fashion retail platforms in India. Nykaa Fashion also has 7 owned brands. These owned brands are available on their online channel and at one physical store, and at third party retailers for many brands.

Valuation & Recommendation

Unlike its competitors, Nykaa has taken the conversation away from discounts and liquidation and more towards brand building of their vendors through content about the quality and use of the products, creating a sustainable market place for long term synergistic relationships with the suppliers.

which is almost double than the industry average. This helps keep fulfilment costs to less than 10% of revenues. As existing customers contribute 70% to the GMV, marketing costs also come down on a y-o-y basis, leading to margin expansion of around 200 bps to 6.6% in FY21.

There remains a large untapped market opportunity for organized retail in Tier 2 and 3 cities, which Nykaa is putting more efforts into. We recommend a subscribe rating to the issue.

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