Falguni Nayar Loses $1 Billion Within Fortnight As Nykaa’s Shares Seeing Freefall

Even as Nykaa has been continuously witnessing a decline in its share prices, the fortune of its founder and CEO Falguni Nayar is on the decline. Her worth has fallen from about $4.08 billion a fortnight ago on October 12 to about $3 billion on Friday (October 28).

The 59-year-old self-made richest woman in India’s worth was $4.08 billion on October 12, according to the Forbes Billionaires List. In about one month, Nykaa’s shares have plummeted from Rs 1,376 apiece on the BSE to Rs 983.55 on Friday, a fall of about 28 per cent.

On Friday itself, shares of FSN E-Commerce Ventures, the owner of Nykaa, tanked 7 per cent to slip below the Rs 1,000 mark for the first time and hit a record low of Rs 975.50. The stock, which nearly doubled on listing day on November 10 last year, is now down about 62 per cent from its 52-week high at Rs 2,574.

The stock has been under selling pressure and lost its status of an exceptional star performer in the pack of newly listed tech stocks, ahead of the expiry of the mandatory one-year lock-in period for pre-IPO investors.

JM Financial said around 31.9 crore shares, or 67 per cent, of Nykaa are likely to open for trade on the expiry day. Steadview Capital Mauritius Ltd, TPG Growth IV SF Pte. Ltd, Lighthouse India Fund III, along with HNIs like Harindarpal Singh Banga, Narotam Sekhsaria and Sunil Kant Munjal will be eligible to sell their holdings.

Nykaa is scheduled to announce its September 2022 quarter financial results on November 1.

Prashanth Tapse, senior vice-president (research) of Mehta Equities, said, “Nykaa has been an underperformer from the past 3-4 months hitting an all-time low today despite a rally seen in the broader markets. The sharp selloff in the counter would be ahead of the end of the post-IPO lock-in period which could trigger more selling pressure which is due on November 10, 2022.”

He added that historically, selling pressure increases, especially for those stocks that are backed by private equity investors. At this point in time, investors who are already stuck in Nykaa should use any pullbacks as an opportunity to exit. Overall, in the short-to-medium term, the business outlook remains less optimistic.

ICICI Securities said, “Nykaa continues to invest in growing new businesses along with having resilient unit economics of BPC and fashion vertical driven by a focus towards driving higher conversion and quality traffic. Further, investments in the differentiated value proposition of content, curation, and convenience are yielding results.”

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