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Falguni Nayar loses $1 billion in a fortnight amid selloff in Nykaa shares

NEW DELHI: With investors making a beeline for the exit door amid a rout in tech stocks globally, founder and CEO Falguni Nayar, known as the ‘makeup queen of India’, has ended up losing $1 billion in a fortnight.

The 59-year-old Nayar, India’s richest self-made woman, was worth around $4.08 billion on 12th of this month, according to Forbes Billionaires List. After non-stop hammering of Nykaa shares in the last fortnight, her fortune was estimated to be at $3 billion at the end of Friday’s session.

Shares of Nykaa or FSN E-Commerce Ventures are down over 20% in the last two weeks and hit a new 52-week low of Rs 975.5 on Friday. The new-age stock which nearly doubled on listing day on November 10 last year is now down about 62% from its 52-week high at Rs 2,574.

IPO investors, who were alloted the stock at an issue price of Rs 1,125, are now sitting at a 13% loss.

Nayar, who founded the e-commerce portal Nykaa in 2012 after a successful career as a top-notch investment banker, became a billionaire and India’s richest self-made woman last year after the unicorn’s blockbuster listing on stock exchanges. Falguni Nayar Family Trust holds a little over 22% stake in the company.

The stock of the beauty and fashion e-tailer had a dream run after listing but the year 2022 turned out to be harsh as investors got concerned about pricey valuations and rising competition in the e-commerce market.

The sell-off deepened in the last two weeks not just due to the carnage in tech stocks globally but also as the mandatory one year lock-in of pre-IPO investors is set to expire on November 10.

Among all the larger shareholders of Nykaa, the highest cost of acquisition is Rs 202, implying around 5x returns at the current market price. “Further, most of these shareholders have also realised gains by selling during the IPO or in secondary sales prior. Of the 9 locked-in financial investors holding 1%+ share capital of Nykaa, only 3 have not generated any liquidity from this investment. Despite that, the size of gains might still be the cause of further selling in order to diversify the portfolio or to book profits,”

said in a report.

Around 12% of Nykaa shareholders are said to be sitting on 100x returns.

Earlier this month, Nomura had initiated coverage on the stock saying that with high medium-term growth potential and unique positioning, the risk-reward is quite favourable for long term investors with potential for the stock to double over the next 5 years.

“Nykaa has a strong moat, led by much higher scale, exclusive brand tie ups, BPC-focused app, omnichannel and a strong influencer network. Thus, we expect it to maintain its competitive edge and drive a ~29% revenue CAGR over FY22-22,” said Nomura’s research analyst Kapil Singh.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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