Nykaa's stock nearly doubled on its first day of trade on Wednesday, indicating that the early-year euphoria that has captivated India's stock market hasn't faded off. Nykaa began by selling cosmetics and grooming goods from both domestic and foreign firms before moving into fashion, pet care, and household products. Falguni Nayar is now worth about $7 billion because she owns about half of Nykaa. According to the Bloomberg Billionaires Index, she has now become India's biggest self-made female billionaire.
An Initial Public Offering (IPO) is the procedure of selling equity of a private company to the public in a new stock issuance (IPO). A company can raise capital from the general public through an initial public offering (IPO). The transition from a private to a public corporation, which frequently involves a share premium for present private owners, can be a critical chance for private investors to fully realise their investment returns. Public investors are able to participate in the offering in the meantime. When a firm lists its securities on a public market, the money paid by investors for the newly issued shares goes directly to the company (primary offering), as well as any early private investors who choose to sell all or part of their holdings (secondary offerings) as part of the bigger IPO. As a result, an IPO allows a firm to tap into a large pool of potential investors to raise funds for future expansion, debt repayment, or working capital. A firm that sells common stock is never obligated to repay its public investors. These owners must manage the volatility of the open market in order to price and trade their shares. Money is exchanged between public investors when shares are sold in the market after the IPO. Early private investors who opt to sell shares as part of the IPO process will be able to monetize their investment. Following the IPO, investors possessing big blocks of shares have the option of selling them piecemeal on the open market or selling a substantial number of shares straight to the people at a fixed price through a secondary market offering. This type of transaction is not harmful to the company because no extra shares are created. During a company's early days on the public market, stock values might fluctuate drastically.
About Nykaa
Nykaa is an Indian e-commerce start-up based in Mumbai and was started by Falguni Nayar in 2012. It provides beauty, wellness, and fashion products online, on mobile apps, and in 76 physical locations. It sells both domestically and internationally manufactured goods. The company transitioned from an online-only to an omnichannel model in 2015 and began selling things other than beauty. It will sell over 2,000 brands
and 200,000 products on its platforms by 2020. Nykaa TV, the company's YouTube channel, also features beauty and fashion material. It has films on beauty, cosmetics, and styling that are educational. #BreakTheHashtag (with Tapsee Pannu), #WhatMakesYourBeautiful (with acid attack survivor and activist Laxmi Agarwal), Beauty in Her Story (in collaboration with Netflix), web series Tinderella, Khoj (a Mother's Day film), and Rakshak (a Raksha Bandhan special film) are just a few of its notable campaigns.
Nykaa’s sale this year
The IPO will commence on Wednesday, October 27th, with an anchor placement of up to Rs 2,340 crore, and will close on Monday, November 1st. The Nykaa IPO, which will be a mix of new shares and an offer for sale, would be priced between Rs 1,085 and Rs 1,125 per share, with a target raise of Rs 5,352 crore at a valuation of $7.1 billion. According to the drafts red herring prospectus (DRHP) authorised by the Securities and Exchange Board of India, the primary issue is valued up to Rs 630 crore, but the offer for sale (OFS) will see current owners sell up to 41.97 million shares (Sebi). TPG, Light House India Fund, JM Financial, Yogesh Agencies, Sunil Kant Munjal, Harindarpal Singh Banga, Narotam Sekhsaria, and Mala Gaonkar are among the venture capitalists who are expected to sell their stakes.
Nykaa's fantastic listing comes roughly four months after Zomato's debut broke thousands of records and lived up to the hype. It went public with a 51% premium over the issue price. The ongoing desire for new-age enterprises, according to financiers and market professionals is good news for the bevvy of unicorns that have lined up to list on national exchanges. The Ant Groupbacked fintech firm Paytm's IPO, which raised Rs 18,300 crore and was India's largest ever, closed for subscription on Wednesday. Softbank-backed hotel aggregator Oyo, cab-hailing company Ola, and logistics supplier Delhivery are all planning initial public offerings. Ecommerce company valuations, according to market participants, are high. After its stock price more than quadrupled from its initial offering price, FSN E-Commerce Ventures Nykaa made it into the top-50 most significant corporations in terms of market capitalization in the country. The company has surpassed two-wheeler producer Bajaj Auto and personal products giant Dabur India in terms of market valuation. Nykaa has slipped behind food-tech behemoth Zomato. The organization has the highest average order value among India's leading online beauty and personal care marketplaces (AOV). The new issue's profits will be used to boost brand reach and engagement, pay off debts, and open franchise stores and distribution centres, among other things.
CONCLUSION
An initial public offering (IPO) is a highly anticipated event. It might be a big opportunity or it could be a losing investment. Some initial public offerings (IPOs) may be overhyped by investment banks, resulting in initial losses. The bulk of IPOs, on the other hand, is noted for benefiting in short-term trading. IPOs are renowned for providing erratic first-day returns, which might attract investors searching for a bargain. An IPO's price usually settles into a consistent value over time. You can sign up for a free Demat account and place a wager on the latest IPO to hit the market.
References
1.ttps://www.investopedia.com/terms/i/ipo.asp
2.https://www.financialexpress.com/market/ipo-news/nykaa-ipo-shares-listing-
daystrategy-stock-debut-november-10-grey-market-premium-soars-buy-
sellhold/2365566/
3.https://www.hindustantimes.com/business/cosmetic-blockbuster-at-dalal-streetnykaa-
ipo-propels-nayar-to-global-billionaires-club-101636594697278.html