E-commerce cosmetics to fashion startup Nykaa's initial public offering (IPO), with a price band of ₹1,085-1,125 a share, has opened for public subscription on October 28 and conclude on November 1. Founded by former investment banker Falguni Nayar, the unicorn offers beauty, personal care and fashion brands through its website, app and 80-odd brick-and-mortar stores.
Commenting on the Nykaa's initial share sale that has opened for subscription today, Nikhil Kamath, Co-founder and CIO of True Beacon and Zerodha said that the beauty startup has had quite a journey, key to which has been the fact that they set “organization processes, and standardised protocol, in the early-stage, when most startups don’t even give it a thought."
For instance, he explained that Nykaa got their inventory management in order, by tying up with suppliers exclusively (like Huda). In Kamath's opinion, that’s the primary reason that propelled their growth to 200% YoY to 5.9 mn units in the quarter or the fact that Nykaa's average orders (3190 per order) are so much higher than the industry average (1800 per order), he said.
However, “as an investor, you need to study the company and its journey before investing in an IPO. Plenty of IPOs start out at high levels and fizzle out later," Kamath added.
Nykaa plans to use the proceeds from the IPO towards acquiring and retaining customers by enhancing the visibility and awareness of its brands, repayment of outstanding borrowings availed by the company and one of its subsidiaries, setting up new retail stores and setting up new warehouses.
Kamath believes Nykaa's network of influencers, warehouses, and physical stores could prove to be assets if Nykaa keeps scaling up at the rate that they are.
Earlier this year, food-delivery firm Zomato Ltd made a stellar stock market debut. Other Indian startups expected to enter the market this year include fintech firm Paytm, hospitality company Oyo Hotels and ride-hailing firm Ola.
