Thread by @SocInvestApp

Nykaa is in the news today. Our analysis:

“Makeup is not a mask that covers up your beauty; it’s a weapon that helps you express who you are from the inside”. Michelle Phan

Looking good is a basic need of any human being – it is a bit more pronounced in the fairer sex (1/n)

Beauty, personal care and fashion products are an age old industry which would also be evergreen. We may shift from offline to online or from chemical based to natural/vegan etc but the need would always be there (2/n)

Current size of the online beauty & personal care (BPC) market in India is estimated to be around USD 1.6 bn. Expected growth rate could be north of 25% (3/n)

Enter Nykaa! Omni channel player focused on BPC products. Market leader, with market share of ~40%, in online BPC space. MOAT - Content led business model with focus on curation – 1,300 influencers, YouTube channel with 1.3mn hours of content and 1.1mn subs (4/n)

Stable operating metrics – please see article for details.

Stock price of Nykaa has almost doubled since the IPO in No 2021. Market, being flushed with liquidity, has been looking for a good start-up growth story. And Nykaa is a profitable one – fits the bill perfectly (5/n)

Company trades at Price to Revenue (annualized Q2 FY22) ratio of 30x in comparison to other Ulta (international peer) at 2.5x and VCs have invested in other unlisted Indian players at 8x with downside protection like liquidation preference (6/n)

On an overall basis, business is good and cash flow positive but is significantly overvalued at the current levels. Do let us know your thoughts. Will you invest?

socinvest.app/post/nykaa-bea… (7/n)

@saurabhk_tweets #Nykaa @threadreaderapp

Disclaimer - Analysis is purely for educational purpose and not to be construed as an investment advice. Please consult your financial advisor before acting on it (n/n)

@threadreaderapp pls unroll