Nykaa registers new low, slumps 11% on heavy volume

Shares of FSN E-Commerce Ventures (Nykaa) hit a new low of Rs 1,776.50, down 11 per cent on Monday, falling as much as 13 per cent in past two trading sessions on the BSE. The stock of fashion and cosmetics online retailer has dropped below its previous low of Rs 1,886 touched on December 20, 2021.

With the past two days decline, the stock price of Nykaa has shed 30 per cent from its record high of Rs 2,574 touched on November 26, 2021. The company issued shares at price of Rs 1,125 per share in its initial public offer (IPO). The stock had made a stock market debut on November 10, 2021.

At 10:11 am; Nykaa traded 9 per cent lower at Rs 1,821, as against a 0.88 per cent decline in the S&P BSE Sensex. A combined 965,000 equity shares had changed hands on the NSE and BSE.

FSN E-Commerce Ventures, more commonly known as Nykaa, is a consumer technology platform, delivering a content-led, lifestyle retail experience to consumers through its diverse portfolio of beauty, personal care & fashion products including their own brand products.

The company’s business depends on the growth of online commerce industry in India and its ability to effectively respond to changing user behaviour on digital platforms. FSN derives a significant portion of its gross merchandise value (GMV) from its top three categories, and its business may be adversely affected if products in these categories do not perform as well as expected, according to analysts.

Meanwhile, in July-September quarter (Q2FY22), Nykaa’s net profit fell 96 per cent to Rs 1.1 crore on a year-on-year (YoY) basis and 69 per cent, compared with the June quarter. Its revenue from operations increased 47 per cent to Rs 885 crore on a YoY basis.

Nykaa’s marketing and advertising expenses grew 286 per cent to Rs 121 crore in Q2FY22, compared with Rs 31.5 crore in the year-ago period. However, the company said its gross profit margin improved 345 basis points to 39.3 per cent in Q2FY22, compared with the corresponding quarter of the previous financial year.

“If FSN is unable to manage its growth or execute its strategies effectively, its business plan and expansion may not be successful, and its business and prospects may be adversely affected. If FSN fails to acquire new consumers or fails to do so in a cost-effective manner, it may not be able to increase revenue or maintain profitability are key concerns,” HDFC Securities had said in IPO note.

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