After TPG Capital, Lighthouse India sells stake in Nykaa; stock falls 4%

Shares of Nykaa parent, FSN E-Commerce Ventures, dropped over 4% in early deals on Tuesday amid strong volume after private equity firm Lighthouse India reportedly sold a stake worth ₹320 crore in the fashion and beauty e-retailer. The private equity firm offloaded around 1.8 crore shares of Nykaa via block deal at a price band of ₹180- 183.50 per share. Bank of America was the broker for the deal.

Nykaa has seen a slew of block deals in the last two weeks following the expiry of the mandatory one-year lock-in period on November 10, allowing promoters and investors to liquidate the pre-IPO stocks owned by them. As per exchange data, nearly 67% of Nykaa’s shares were released after the expiry of the lock-in period. Few foreign funds including Segantiii India Mauritius, Lighthouse India Fund, and TPG Capital have already sold some shares in the company.

Recently, Lighthouse India Fund-III pared shares worth ₹525 crore in Nykaa, while American investment company TPG Capital offloaded 5.4 crore shares worth ₹1,000 crore, or 1.9% stake, of beauty and fashion e-tailer in a block deal on November 18.

On Tuesday, Nykaa shares opened a tad higher at ₹185.50, against the previous closing price of ₹183.55 on the BSE. In the first hour of trade so far, the largecap stock declined as much as 4.4% to ₹175.5, while market capitalisation dropped to ₹50,158 crore. On the volume front, 197 lakh shares changed hands over the counter on the BSE as compared to the two-week average volume of 157.4 lakh stocks.

Nykaa , which debuted on the domestic bourses on November 10 last year, has fallen 50% in the last one year, while it tumbled 28% over a six months period. On a year-to-date basis, the stock has plunged nearly 50%, whereas it has fallen 8% in a month. In the last one week, the stock has shed 6%. The counter currently trades 9% higher than its all-time low of ₹162.91 touched on October 28, 2022, while it has nosedived 59% against its record high of ₹429.86 on November 26, 2021.

Recently, 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. The decision to issue bonus shares to shareholders also failed to impress investors as the stock continued to reel under selling pressure.

In the recently concluded September quarter (Q2 FY23), 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).