Nykaa drops 9% on listing of bonus shares; falls 16% in two days

Shares of FSN E-Commerce Ventures, the parent company of beauty and fashion e-tailer Nykaa, continued losing streak for the second day and plunged nearly 9% in intraday trade on Wednesday amid strong volume. The stock price tumbled on a day when around 237.4 crore bonus equity shares were listed on the domestic exchange. The stock has fallen as much as 15.8% in the last two sessions after the one year lock-in period for pre-IPO shareholders expired last week.

The counter witnessed sharp selling today as investors were waiting for the listing of bonus shares after the lock-in period ended on November 10. The expiry of the mandatory one-year lock-in period 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.

Extending losses for the second straight session, Nykaa shares opened 3.6% lower at ₹185, against the previous closing price of ₹192 on the BSE. During the session so far, the stock shed as much as 8.85% to hit an intraday low of ₹175, while market capitalisation dropped to ₹52,408 crore. The counter saw a surge in selling activities as 331.5 lakh shares changed hands on the BSE as compared to the two-week average volume of 45.15 lakh stocks.

Nykaa, which made its debut on domestic bourses on November 10, 2021, has given a negative return of 50.5% in the past one year, whereas it lost 22% over a six month period. In the last one month, the largecap stock has dropped 4.6%, while it gained over 5% in a week.

Nykaa shares currently trade 7% higher than its all-time low of ₹162.91 touched on October 28, 2022. The stock has fallen 59% against its record high of ₹429.86 on November 26, 2021.

Nykaa parent, FSN E-Commerce Ventures, recently issued bonus shares in the ratio of 5:1, i.e. five bonus shares for every one share held in the company. The board had fixed November 11 as the ‘Record Date’ for the purpose of determining the members eligible for bonus equity shares.

The company allotted 237.4 crore bonus equity of ₹1 each on November 12, which were listed and permitted to trade on the exchange with effect from November 16.

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.