Nykaa’s dream debut: Founder now India’s richest self-made bizwoman

"I was always looking to have an idea that was ahead of its time so that I get a chance to build on that before the Tatas,

Birlas

and Ambanis identify it," says

Falguni Nayar

, CEO & founder,

Nykaa

, as the online beauty and cosmetics retailer saw its market value cross the Rs 1 lakh crore mark on listing on Wednesday. At this level, the nine-year-old startup is more valuable than traditional giants such as Coal India, BPCL, Britannia and just below M&M and

Bajaj Auto

.

For the former investment banker. it has been a dream journey so far—the sizzling stock market debut of the company has already catapulted her as the richest self-made woman in India, with a net worth of close to $7 billion.

On listing the stock price of FSN E-Commerce, which runs Nykaa, almost doubled to Rs 2,001 on BSE, up from its IPO price of Rs 1,125. It ended the debut session on the stock market at Rs 2,207 and a market capitalisation of Rs 1.04 lakh crore, or a little more than $14 billion. The bidding for its Rs 5,349-crore IPO had closed on November 1 with an oversubscription of 81.7 times.

The high market capitalisation of Nykaa also makes it one of the most valued stocks on BSE. At the debut-day closing price it had a price-to-earnings ratio of 1,588 times compared to the IPO valuation of 839 times for this online cosmetics retailer.

Why did

Nayar

, who cut her teeth in investment banking, choose cosmetics and fashion? Nayar says she entered a sector about which she knew almost nothing. "I looked around for ideas and saw that beauty was an underdeveloped market in India compared to the West or even Japan and South Korea. It looked like an opportunity and since we are professionals with no deep pockets, I wanted to start in a sunrise industry before many others jumped in," she told TOI.

Before ringing the opening bell at the National Stock Exchange on Wednesday, she told the gathered audience, "I started Nykaa at the age of 50 with no experience in technology or beauty or fashion. I hope the Nykaa journey can inspire each of you to be the nayika (heroine) of your lives."

She noted she was in an established career which would often see her help entrepreneurs in the position she is in today. She said she saw few believers and many naysayers when she started Nykaa. "The beauty industry was nascent and customers were wary of ordering online given counterfeit products," she added.

Having earned a degree in commerce from

Sydenham College

, Mumbai, Nayar did an MBA from IIM-Ahmedabad in the 1980s. She spent close to two decades with Kotak Securities, rising to the position of managing director of Kotak Investment Banking before leaving it to begin her entrepreneurial journey.

Perhaps entrepreneurship was in her blood. She is a Gujarati, born and raised in Mumbai. Her father ran a small bearings company, assisted by her mother. Nayar has said previously that household chatter revolved around investments, stock market and trade.

Asked about her thoughts on the price pop of the shares, she says it is a combination of the growth potential that investors see in an underpenetrated market like India and the strong unit economics that saw the company turn black last fiscal.

The beauty and personal care market in India is expected to grow at a compound annual growth rate of 12% to $26 billion between 2019 and 2025, as per reports from consulting company

RedSeer

. Though the market dipped last year due to the pandemic, it is expected to pick up pace as more people shop online.

"For an ecommerce company like ours, we have the right unit economics. We do not lose but make money on every order that we service. The balance between acquiring new customers and keeping unit economics intact is very important. If you don’t have that, you end up diluting your equity to get that growth," she cautions.

Nayar says that small towns, which account for more than half of the topline, will continue to remain the growth drivers. While 95% of the total sales are online, the rest is from the 80 stores across the country. That is expected to go up to 15% as its stores and footfalls go up along with the pandemic receding. Nykaa had 7.1 million transacting customers till August this fiscal, up from 5.6 million in the whole of last year.

Nykaa has over 1,500 brands with a comprehensive selection of makeup, skincare, haircare, fragrances, personal care, luxury and wellness products for women and men. It has a portfolio of luxury brands including

Bobbi Brown

and Estee Lauder.

The company's revenue grew 38% to Rs 2,440 crore last fiscal while profit was Rs 62 crore, against a loss of Rs 16 crore a year earlier.