TPG Capital sells Nykaa shares worth ₹1,000 cr; stock jumps 6%

Shares of FSN E-Commerce Ventures, the parent company of Nykaa, rose 6% in opening deals on Friday after the American investment company TPG Capital reportedly offloaded 5.4 crore shares, or 1.9% stake, of beauty and fashion e-tailer in a block deal on Friday. Citigroup was appointed as the banker for the deal.

Nykaa shares have fallen over 12% in the last three sessions amid block deals following listing of its bonus shares on the exchanges after the lock-in period for pre-IPO shareholders came to an end. A slew of foreign funds including Segantiii India Mauritius, Lighthouse India Fund, and Citigroup have pared their stake in the company recently, following the expiry of the mandatory one-year lock-in period for existing investors on November 10.

Nykaa share price opened 2.1% higher at ₹189.55, against the previous closing price of ₹185.55 on the BSE. In the early deals so far, the largecap stock rallied as much as 6% to hit an intraday high of ₹196.65, while market capitalisation rose to ₹54,629.9 crore. On the volume front, 9 lakh shares changed hands over the counter as compared to two-week average volume of 154.51 lakh stocks on the BSE. In comparison, the BSE Sensex was trading 151 points lower at 61,598 levels, tracking mixed cues from global peers.

Nykaa parent FSN E-Commerce Ventures, which made its debut on domestic bourses on November 10 last year, has fallen 45% in the last one year, while it shed 22% over six months period. On a year-to-date basis, the stock has dropped 44% in the calendar year 2022, whereas it has gained 1.5% in a month. In the last one week, the stock has slipped 9%. The counter currently trades 20% higher than its all-time low of ₹162.91 touched on October 28, 2022, while it has tumbled 54% against its record high of ₹429.86 on November 26, 2021.

The share price of Nykaa has been under stress since the lock-in period for pre-IPO investors came to an end on November 10. This 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.

Recently, Nykaa parent issued bonus shares in the ratio of 5:1, i.e. five bonus shares for every one share held in the company. 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.

On the financial performance front, 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.