Table of Contents
Beauty E-Commerce
Nykaa
Overview
Nykaa.com is an inventory-led e-commerce beauty platform selling third-party beauty and personal care brands. In 2016, Nykaa introduced private labeled products and is currently expanding its product offerings. The company hosts over 1,000 brands on its platform, out of which about 65 are luxury brand
Nykaa.com platform was launched in 2012, while they opened their first physical store in the year 2014 at Indira Gandhi International Airport. Nykaa now has 73 stores across 38 cities of India. They have opened their first kiosk in Kerala in 2020. The luxe format features premium and luxury brands while On-Trend features fashionable brands.
In 2018, Nykaa expanded into the female fashion segment by launching a separate platform Nykaafashion.com. They opened their first fashion retail store in 2020.
In 2018, Nykaa launched the NykaaMan platform to tap into the men’s grooming segment. Two years later in 2020, Nykaa Fashion launched the men’s fashion category through their men’s platform.
There are two main revenue segments for Nykaa, Beauty products, and services, and Apparel.
| Categories | % of Revenue |
| Beauty | 80 |
| Apparel | 20 |
Financials
| Metrics | FY 21 (INR Crore) | FY 20 (INR Crore) | Growth (%) |
| Revenue | 2,452 | 1,778 | 38 |
| Net profit | 61.96 | -16.34 | 479 |
| Gross merchandise value | 4.046 | 2,700 | 50 |
Nykaa was valued at $1.2 billion in 2020 during its last funding round when it raised $ 9 million from Steadview capital. Nykaa is yet to announce the valuation at which it plans to raise capital from the capital market. The market speculation values the company around $3 billion.
Techdhan Analysis
The Indian beauty market has been dominated by an unorganized sector. Even as beauty products were retailed through departmental stores and some of the retail chains, however, they catered to a small market segment of upper-middle class and high-income segment. Nykaa democratized the beauty market by providing access to quality products to people across different income segments in metros, tier I, I, and III towns through its platform. They brought the spotlight into the men’s grooming market through the NykaaMan platform.
Nykaa’s strength is curation, access, and authenticity. They offer finely curated authentic brands across different price segments. Product authenticity has been a major problem in the beauty business which has been solved by Nykaa.
Nykaa is super strong in the beauty business which contributes 80% of revenue. It is too early to comment about the fashion business.
Nykaa has good potential going forward in the beauty business which is expecetd to become $20 Billion or INR 1,50,000 Crore market by 2025. The online market share is estimated to be 2% which may reach 10% in another 4 years. We beleive the beauty eCommerce business to be INR 15,000 crore If Nykaa maintains its market share then the beauty business should contribute INR 5,000 crore which implies a CAGR of 25%.
Techdhan Recommendation
Nykaa IPO Review
Nykaa is an investment-grade company and you should invest in its share in the IPO. Once pricing details are disclosed by the company we will be able to comment on its valuation.