IPO Alert: FSN E-commerce Ventures Ltd files for public listing

The beauty and personal care market in India was sized at ₹1.26 trillion in 2019, growing at a CAGR of 13% in the last 3 years. Due to Covid-19, the market fell to ₹1.12 trillion in 2020 and now is projected to grow at a CAGR of 12% to reach ₹1.98 billion in 2025.

FSN E-Соmmerсe Ventures Рrivаte Limited, having two famous verticals Nykaa and Nykaa Fashion, hаs filed its Draft Red Herring Prospectus with mаrket regulator SEBI.

The initial public offer comprises a fresh issue of equity shares aggregating up to ₹5.25 billion, and an offer for sale of up to 43.1 million equity shares being offered by the selling shareholders.

The company would allocate ₹350 million of net proceeds towards investment in its subsidiaries like Nykaa Fashion for the set-up of new retail stores and new warehouses. The company plans to use ₹1.3 billion to make repayment or prepayment of its borrowings. FSN E-commerce would utilize ₹2 billion to enhance the visibility and awareness of its brands and general corporate purposes.

Company Profile

FSN E-commerce is a digitally native consumer technology platform having a diverse portfolio of beauty, personal care, and fashion products, including its owned brand products manufactured by them.

The Mumbai-based company has successfully created two business verticals. Nykaa, which is a beauty and personal care company, and Nykaa Fashion, which deals in apparel and accessories.

As of March 31, 2021, the company had cumulative downloads of 43.7 million across all its mobile applications out of, which 86.7% of its online GMV(gross merchandise value) came through its mobile applications.

The company’s offline channel comprises 73 physical stores across 38 cities in India over three different store formats like Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks.

Financials

The company had total revenue of ₹24.5 billion for the year ending 31 March 2021, vs ₹17.7 billion in the previous year. FSN E-commerce had a profit of ₹619.4 million in 2021 against a loss of ₹163.4 million in 2020.

Meanwhile, the company outsources the manufacture of our owned brand products to third-party manufacturers under loan and license arrangements or contract manufacturing.

The sale of their owned products including the products governed under the Drugs and Cosmetic Act subjects the company to unique risks and heightens certain other risks, like import risk, brand risk, intellectual property rights, ongoing brand monitoring risk, and dependency on relationships across multiple channels of sales for its owned brands.