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Citi to sell Nykaa shares worth ₹250 crore via block deal; stock falls 7%

Extending its losing streak for the second straight session, shares of beauty and fashion e-tailer FSN E-Commerce Ventures, the parent company of Nykaa, dropped as much as 7% in early trade on Thursday amid report that Citigroup will sell shares in e-fashion retailer via a block deal. As per report, Citigroup will offload shares worth ₹250 crore at a discount of up to 2% on Wednesday’s closing price.

Nykaa shares trade ex-bonus today ahead of the record date for its 5:1 bonus share issue i.e. five bonus shares for every one share held in the company. The board of the company has fixed November 11 as the ‘Record Date’ for the purpose of determining the members eligible for bonus equity shares.

On Wednesday, Nykaa shares settled 4.9% lower as investors turned jittery ahead of the expiry of the lock-in period for its pre-IPO investors. The mandatory one-year lock-in for Nykaa share expires today, which means promoters and investors can liquidate their pre-IPO stocks owned by them. During the lock-in period, the pre-IPO investors are not eligible to sell their shares.

Nykaa, which made its debut on domestic bourses on November 10, 2021, has given just 0.4% returns to its shareholders against its issue price of ₹1,125. The largecap stock, with a market capitalisation of ₹49,745 crore, hit an all-time low ₹975.50 on October 28, 2022. It touched an all-time high of ₹2,574 on November 26, 2021.

On Thursday, Nykaa share price opened sharply lower by 6.5% at ₹168.05 and declined as much as 7.15% to hit a low of ₹166.85. The shares currently trade 61% lower than its 52-week high of ₹2,574 on November 26, 2021.

Earlier this month, 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).

The earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 112% YoY to ₹61.1 crore, while EBITDA margin improved to 5% from 3.3% in Q2 FY22.

During the quarter under review, Nykaa, in partnership with Estee Lauder Group of Companies launched Beauty & You India, a first of its kind partnership to identify and support the next generation of beauty entrepreneurs in India with a non-equity grant and mentorship. It teamed up with HUL to launch HUL’s new science-based skin care brand ‘Acne Squad’ at Nykaa. It has also partnered with the Apparel Group to undertake an omnichannel, multi branded retail operation business in Gulf Cooperation Council (GCC) on October 6, 2022.

As of September 30, 2022, Nykaa had a physical store count of 124 stores, including two new fashion stores, with a total area of 1.2 lakh square feet across 53 cities. It expanded its fulfilment centres to 14 cities, with a total area of 11.5 lakh sq. ft.



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