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FSN E-Commerce Ventures Ltd.

About the Company

Incorporated in 2012, FSN E-Commerce Ventures Ltd. (Nykaa) is a digitally native consumer technology platform, delivering a content-led, and lifestyle retail experience to consumers. It has a diverse portfolio of beauty, personal care and fashion products including its owned brand products manufactured by the company. Nykaa operates under two verticals – Nykaa: Beauty & Personal Care and Nykaa Fashion: Apparel & Accessories. Its beauty and personal care offering is extensive with 256,149 SKUs from 2,644 brands primarily across makeup, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories. Nykaa Fashion housed 1,434 brands and 2.8 million SKUs with fashion products across four consumer divisions: women, men, kids and home. It offers consumers an omnichannel experience by providing both online and offline channels. It also focuses on educating consumers via digital content, digital communities and tech product innovations, which is an integral component of its business model.

Objects of the Issue

* Investment in certain subsidiaries, namely FSN Brands and/or Nykaa Fashion for funding the set-up of new retail stores

* Capital expenditure to be incurred by company and investment in certain of its subsidiaries, namely, Nykaa E-Retail, Nykaa Fashion and FSN Brands for funding the set-up of new warehouses

* Repayment or prepayment, in full or in part, of certain borrowings availed by company and one of its subsidiaries, namely, Nykaa E-Retail;

* Expenditure to acquire and retain customers by enhancing the visibility and awareness of its brands

* General corporate purposes

Valuation

Nykaa has a large market opportunity aggregating Rs. 10.6 trillion in the fast-growing beauty, personal care and fashion industry by 2025 in India. The Indian beauty and personal care market is estimated to grow to Rs. 2.0 trillion by 2025 from Rs. 1.1 trillion in 2020. The Indian fashion market is estimated to grow to Rs. 8.7 trillion by 2025 from Rs. 3.8 trillion in 2020. The growth is projected to be primarily driven by the market shift towards the organized sector, high growth of e-commerce due to increased internet penetration, growing wallet share for beauty, personal care and fashion products and increased spending leading to subsequent premiumization across categories. Further, compared to other mature e-commerce categories, beauty and personal care and fashion have lower online penetration.

Nykaa is well placed to benefit from growing industry trends given its resilient, capital-efficient business with a combination of strong growth and profitability. Its financial performance has been strong with a revenue CAGR of 48.2% over FY19-21. The operating margins have also seen a marked improvement from 1.85% in FY19 to 6.61% in FY21. Going forward, Nykaa intends to continuously acquire new customers and increase its customer loyalty. It also plans to expand into lifestyle adjacencies and launch new channels. It also aims to explore expansion selectively and prudently into international markets. Given the positive industry prospects and Nykaa’s strong foothold, we have a positive on the company for the long term.

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SEBI Registration number is INZ000174330

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