FSN E-commerce Ventures (Nykaa) IPO: Information analysis

Incorporated in 2012, FSN E-commerce Ventures, the parent company of Nykaa, is a native consumer-technology company involved in selling beauty, wellness, personal-care and fashion products. Besides having a diverse portfolio of products, it sells its own brand products under two verticals - beauty and personal care and apparel and accessories. While the company's business is primarily online, it also has 80 retail stores across 40 major cities in India. As of August 2021, the company offered around 3.1 million stock-keeping units (SKUs) from 4,078 national and international brands. While the beauty and personal-care division offers 2,56,149 SKUs from 2,644 brands primarily across make-up, skincare, haircare and fragrance, the fashion division offers around 2.8 million SKUs from 1,434 brands across various categories. With the company striving to be more technologically focused than retail-based, it derives around 90 per cent of its revenue from the online business. And out of this revenue, 90 per cent comes from its app and the remaining from other online platforms and retail outlets. Despite that, it is still opening several retail outlets to compete with unorganised players. The company gets 40 per cent of its revenue from tier-1 cities, while the remaining 60 per cent from tier-2 and tier-3 cities. As reported by the company, its user metrics for the five months ended August FY22 stood at 14.7 million monthly average unique visitors and 1.2 million average transacting consumers - a significant rise from the year-ago period. India has been witnessing an increase in the purchase of beauty and fashion products, owing to the country's young professionals. According to a RedSeer report, the Indian beauty and personal-care market is expected to grow at 12 per cent CAGR, while the fashion market is expected to grow at 18 per cent CAGR until 2025. With the low penetration in the Indian beauty space and a few organised players, Nykaa is expected to gain from this booming market. Strengths 1) Since the company derives around 80 per cent of its revenue from its mobile application, it is self-reliant. 2) It is one of India's leading beauty and personal-care companies in the organised space and enjoys strong brand awareness among young customers. 3) It has strong supply-chain capabilities with around 20 warehouses throughout the country and can del