Thread on #Nykaa DRHP Findings - Business & Valuations
Nykaa has hogged a lot of limelight as it will be the first Indian beauty retailer to list on the exchanges and it is profitable too! (FY21 was profitable, not earlier)
Hit the Retweet to spread this thread about Nykaa :)
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About Nykaa -
- Incorporated in 2012
- Evolved from a beauty retailer to a lifestyle focused tech platform
- As of FY21, they offered ~2.0 million SKUs from 3,826 national and international brands
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- They have a diverse portfolio of beauty, personal care, and fashion products, including owned brand products (Portfolio of 13 owned brands) manufactured by them. They have an Omnichannel presence
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Online - Mobile Apps, websites, and mobile sites. Total Downloads 43.7 mn, 86.7% online GMV came from mobile apps. RedSeer says this puts them amongst leading platforms (FY21)
Offline - 73 physical stores across 38 cities in India over three different store formats (FY21)
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Some More Facts -
- Contribution to GMV sales in Tier 2 and Tier 3 cities collectively has increased from 56.9% in FY19 to 64% in FY21
- share of prepaid orders has increased from 42.3% in FY19 to 57.3% in FY21
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- They do not control the pricing strategies of sellers/brands and typically contract on a non-exclusive basis
- They rely on third-party couriers, such as Aramex, Blue Dart, Delhivery, Ecom Express, ExpressBees, and Shadowfax to deliver orders from warehouses to consumers
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Beauty and Personal Care Offering
- 197,195 SKUs | 2,476 brands
- make-up, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories (FY21)
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Fashion Offering
- Launched in 2018
- assortment of offerings, across price points
- housed 1,350 brands, 1.8 mn SKUs with fashion products across 4 divisions: women, men, kids, and home (FY21)
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- Includes western wear, Indian wear, lingerie, footwear, bags, jewelry, accessories, athleisure, home décor, bath, bed, and kitchen
- Mix of brands across established national brands, international brands, luxury brands, and emerging labels and designers
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Nykaa Prive - consumer loyalty program
- for the beauty and personal care vertical
- Exclusive offers/discounts, gifts, free shipping, access to exclusive content, priority access to the consumer service team
- FY21 - 2.1 million Nykaa Prive members
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Nykaa TV (YouTube based content platform)
- Watch time of 1.3 mn hrs
- 39,498 posts on Insta + FB
- RedSeer Report says they are one of the most influential lifestyle platforms in India with over 12.6 mn followers across leading SM platforms as of FY21
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Store Formats -
- Nykaa Luxe
- Nykaa On Trend
- Nykaa Kiosks
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The most important metric for them - the orders!
- Order volumes for different verticals
- Gross merchandise value (GMV)
- Avg order value (AOV)
Only 7 qtrs data is shown, so is it a trend that is here to stay or just because of lockdowns? Nobody knows!
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Marketing costs - again reduced, for tech companies this was a good year as they could achieve more incremental sales on lesser marketing costs, we will get more clarity about this on the IPO meet
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This image is interesting because it shows that Nykaa has a sticky customer base
55% existing customers in FY19 to 70% existing customers in FY21 - A loyal customer base is definitely beneficial!
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Quick Facts -
- GMV from Top 3 Vendors - 34.2%, 27.1%, and 24.4% of total GMV in FY19, FY20, FY21 respectively
- As of Fy21 they had a network of 1363 influencers, including Gen Z trendsetters, beauty, fashion, and lifestyle bloggers, makeup artists, celebrities
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- Hosted 38 Cr, 57 Cr, and 66 Cr Visits on beauty and personal care websites and mobile applications for FY19, FY20, and FY21 respectively
- Small Pledge as well
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Shareholding (as of DRHP Date)
Why the IPO?
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Key Operating and Financial Metrics
- Hyper scale-up has happened
- AOV gone up
- GMV has gone up
- Unique visitors also up
It was when Mr. Uday Kotak was 20 years old in 1979 and he was playing cricket when the unthinkable happened
He flicked a shot between the covers and as he was mining between the wickets, a fielder flung the ball back to the stumps in order to get him run out
The ball hit him on the head and he collapsed (they used to play fast bowling under all kinds of conditions without any helmets and no regulations on bouncers)
He doesn't remember how all of it happened but the competitive spirit in him prevailed
In January 2002, Amazon reported its first profitable quarter, posting net income of $5 million, a meager but symbolic penny per share. Marketing costs were down, international revenues from the UK and Germany were up,
sales from third-party sellers on the vaunted Amazon platform made up 15% of the company's orders. The exclamation point on the accomplishment was that Amazon had turned a profit by both controversial pro forma accounting standards and conventional methods.
Amazon had finally shown the world that it wasn't just another doomed dot-com. The stock price immediately jumped 25% in after-hours trading, clawing its way out of the single digits.
A really cool unheard story of Nykaa and the founder Falguni Nayar!
Mr. Uday Kotak speaks of Falguni Nayar's stint at Kotak -
"We had started a consulting division in KMFL. A year after she joined us, Sanjay Nayar, her husband, who was working in Citibank, was posted to London
Like a typical Indian wife, she wanted to join him. So, we took a view - We said, 'Falguni if you go to London, we will set up a London office. We want to do sales and trading in equities and in GDRs. Why don't you set it up?
So, Falguni set up our London office. Kotak Mahindra (UK) happened because of Falguni. After two years, Sanjay was transferred to New York. We said, Great! Falguni set up New York: By then, we had already set up a JV with Goldman.
- A multi-channel auto platform
- Presence across vehicle types and value-added services
- Marketing, buying, selling, and financing of new and pre-owned cars, two-wheelers, pre-owned commercial vehicles, and farm & construction equipment.
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- As of June 2021, they had 2221 employees (703 in main and 1518 in subsidiaries). They have 75 trademarks and 105 domains
- As of June 2021 consumer platforms, CarWale, CarTrade, and BikeWale together had avg of 27.11 mn unique visitors per month (88.14% organic visitors)
Companies that look up to other companies in the #Retail/#FMCG Space -
Marico - Saugata Gupta loves 2 US brands and as per him they are fantastic in digital marketing - Glossier and Drunk Elephant
Dmart – CEO Navil Noronha was asked organizations that he looks up to and considers as a role model in Retail. He said Costco, Ikea, and Uniqlo. He likes the Culture, the way they think about products, assortment, simplicity, employees, partners, and business."
Dabur - Many brands that are inspirational in branding marketing/space. In the Indian space – there are great examples such as Wow, Botanica, Mamaearth, (A question that I asked on the con call)