BENGALURU: Omni channel beauty and fashion startup Nykaa is a rare profitable startup looking to raise nearly Rs 4,000 crore at a $5 billion valuation, almost a five-fold jump from its last financing round last year.
Nykaa , which was started by Falguni Nayar, a former investment banker in 2012, said in its Draft RedHerring Prospectus (DRHP) that the IPO will comprise a fresh issue of equity shares aggregating to Rs 525 crore and an offer for sale of the 43 million equity shares by the existing shareholders including the Sanjay Nayar Family Trust, TPG Growth IV, Lighthouse India Fund III, Lighthouse India III Employee Trust, JM Financial and Investment Consultancy, Sunil Kant Munjal, among others.
Unlike many of its industry peers, Nayar’s company turned cash flow positive during FY21 with Covid turning the fortunes of the company, which reported Rs 61.9 crore Profit after tax (PAT) compared to the losses worth Rs 16 crore in FY20 and Rs 24,5 crore in FY19.
Revenue from the operations grew by 38% at Rs 2,440 crore for FY21 compared to Rs 1,767 crore a year ago. On an average,19.5 million orders were placed on the platform during FY21, with almost a two-fold growth in sales in the fashion category y-o-y.
According to a Redseer report, Nykaa commands one of the highest average order values on e-commerce platforms worth Rs 1,963 for beauty and personal care (BPC) and Rs 2,739 for fashion segments.
What lies ahead?
Nykaa has a total addressable market size of $152 billion across BPC and fashion segments, which are estimated to grow at a compounded annual growth rate (CAGR) of 12% and 18% respectively by 2025.
With a significant headroom for growth across its targeted segments, especially as the online penetration in BPC and fashion segments grow, Nykaa can leverage its already existent strong market share as well as invest further to compete with rivals like Amazon, Flipkart, My Glamm, Tata Cliq among others.
The Redseer report points that the share of organised retail in BPC segments grew at a strong 71% CAGR to penetrate 6% of the BPC market in 2019, at Rs 7,000 crore. The sector further grew at 30% from 2019 to 2020 to reach Rs 9,100 crore and penetrates 8% of the overall BPC market.