Nykaa shares jump 6% on bonus issue plan

Shares of FSN E-Commerce Ventures, the parent company of Nykaa, climbed nearly 6% in early trade on Thursday after the e-commerce major said that its board will be considering the issuance of bonus shares to the equity shareholders of the company on October 3. The announcement by the cosmetics-to-fashion retailer came a month before it completes one year of listing on the domestic bourses. The stock, which made a stellar debut on November 10, has witnessed severe hammering lately as investors turned skeptical about new-age companies amid volatility in the broader market.

Nykaa shares opened 3.35% higher at ₹1,320.15, against the previous closing price of ₹1,277.35 on the Bombay Stock Exchange (BSE). In the first two-hour of trade so far, the largecap stock gained as much as 5.7% to hit a high of ₹1,350. The market capitalsation (m-cap) increased to ₹62,337 crore, with 0.33 lakh shares changing hands over the counter as compared to the two-week average volume of 0.20 lakh stocks.

After a blockbuster listing in November last year, shares of Nykaa, an e-commerce company selling cosmetic products, failed to woo stock market investors, with shares trading nearly 12% higher than its 52-week low of ₹1,208.40 touched on May 12, 2022. It currently trades 47% lower than its all-time high of ₹2,574 on November 26, 2021.

The stock of FSN E-Commerce Ventures, the operator of Nykaa and Nykaa Fashion chain, has delivered a negative return of 37% in the calendar year 2022, while it has fallen 19% in the past six months. It currently trades 20% higher than the upper limit of its IPO price of ₹1085 - ₹1125. 

In an exchange filing on Wednesday, FSN E-Commerce Ventures said that its board will meet on October 3 to consider and approve the issuance of bonus shares to the equity shareholders of the company.

“A meeting of the board of directors of the company will be held on Monday, October 03, 2022, to, interalia, consider and approve the issuance of bonus shares to the equity shareholders of the company in the ratio, as it may deem fit and seeking shareholders’ approval by way of postal ballot and such other approval(s), as the board may deem appropriate,” it said.

In the June quarter of 2022 (Q1 FY23), Nykaa reported a 33.4% growth in consolidated net profit at ₹4.55 crore, versus ₹3.41 crore in the year-ago period. Sequentially, the profit declined 47.6% from ₹8.56 crore in the March quarter (Q4 FY22). The beauty e-commerce platform’s revenue from operations jumped 40.5% to ₹1,148.4 crore in Q1 FY23, as against ₹817 crore in the same quarter last fiscal. During the quarter, Nykaa's gross merchandise volume (GMV) grew 47% YoY to ₹2,155.8 crore.