Nykaa share falls 3% after CFO quits; trades near all-time low
Shares of the beauty products e-commerce company FSN E-Commerce Ventures (Nykaa) extended losing streak for the third straight session amid a slew of negative developments. The stock has fallen 13.6% in the last three sessions as pre-IPO investors pressed the sell button soon after the company issued bonus shares, which was intended to encourage investors to stay invested post the end of the lock-in period. However, Nykaa’s 5:1 bonus issue plan seemed to have backfired as analysts believe that the existing shareholders will have to pay higher tax due to the bonus issue.
Nykaa share price has tumbled more than 10% since its lock-in ended on November 10, while the sell-off gained momentum after the e-beauty retailer issued around 237.4 crore bonus equity shares. In a slew of block deals, private equity firm Lighthouse India, TPG Capital, Narotam Sekhsaria, and Mala Gaonkar have offloaded their stake in the company, while Morgan Stanley, Aberdeen Standard Asia Focus, Canada Pension Plan Investment Board, and Norges Bank have emerged as buyers.
On November 22, Lighthouse India sold 1.8 crore equity shares worth ₹336 crore of FSN E-Commerce Ventures through a block deal. Before this, the private equity firm offloaded another 3 crore shares worth ₹525 crore on November 16.
Among others, American investment company TPG Capital sold 5.4 crore shares of Nykaa's parent for ₹1,000 crore on November 18.
The Falguni Nayar-led company has seen a surge in block deals after nearly 67% of Nykaa’s shares were released after the expiry of the lock-in period. Besides, Nykaa parent issued 237.4 crore bonus equity shares of ₹1 each in the ratio of 5:1, i.e. five bonus shares for every one share held in the company, which were listed and permitted to trade on the exchange with effect from November 16.
Nykaa, which made a stellar debut on the domestic bourses on November 10 last year, has failed to impress investors so far. The stock has fallen 50% in the last one year, while it dropped 26.5% over a six months period. On a year-to-date basis, the stock has plunged nearly 51%, whereas it has lost 7.5% in a month.
On Wednesday, Nykaa shares opened lower at ₹169.95, against the previous closing price of ₹175.20 on the BSE. During the session, the stock declined as much as 3.3% to hit an intraday low of ₹169.3, while market capitalisation dropped to ₹48,677 crore. The counter trades near its all-time low of ₹162.91 touched on October 28, 2022, while it has nosedived 60% against its record high of ₹429.86 on November 26, 2021.
In a fresh development, Nykaa’s chief financial officer Arvind Agarwal has resigned to pursue other opportunities in the digital economy and start-up space. “Arvind Agarwal, Chief Financial Officer of FSN E-Commerce Ventures will be leaving the Company, effective close of business hours on November 25, 2022, to pursue other opportunities in the digital economy & start-up space,” it said in a filing on November 22.
On the financial front, the cosmetics-to-fashion retailer posted a 333% year-on-year (YoY) jump in its consolidated net profit at ₹5.19 crore for Q2 FY23, compared with ₹1.17 crore in the same period last year. However, on a quarter-on-quarter basis, the net profit rose marginally by 3.6% from ₹5.01 crore in June quarter of the current fiscal. The consolidated revenue from operations grew 39% YoY to ₹1,230.8 crore in Q2 FY23, against ₹885.26 crore in the year-ago period. On a sequential basis, the revenue climbed 7% from ₹1,148.4 crore in the June quarter of the current fiscal (Q1 FY23).