Nykaa share price crashes to trade below IPO price level; check what analysts have to say

Among all the new-age companies that floated their IPO last year, Nykaa has been the best-performing share among them.  In November 2021, the stock had made a stellar debut to list at a 79% premium at Rs 2,018 as compared to the issue price of Rs 1,125. Soon, the stock scaled an all-time high of Rs 2,573 in Dec-2022. However, since May 2022, the stock price has been continuously on the decline.

Today, Nykaa's share price has come below the issue price as the lock-in for pre-IPO investors expires soon. The Nykaa board has also announced the issue of bonus shares. Let us look at all the details and what investors should do.

Nykaa share price: Deepdive

Nykaa Share Price: Bonus Issue

Below are all the details related to Nykaa's bonus issue:

• Earlier this month, the Nykaa board approved the issuance of bonus equity shares in the ratio of 1:5.
• It means - the company will issue a bonus of 5 shares for every 1 share that investors hold as of the record date.
• The actual bonus equity shares count to be issued, and post-bonus issue share capital will be determined based on the paid-up share capital as on the record date.
• The company has fixed 3 November 2022 as the record date to determine which investors are eligible for bonus equity shares.

Nykaa pre-IPO investors lock-in over

In July, Zomato share price fell significantly after the shares came out of the mandatory one-year lock-in after IPO. Investors are looking at more or less the same picture for Nykaa as shares have fallen nearly 13% in the last one month.

• Nykaa or FSN E-Commerce Ventures has an expiry date of 10 November for pre-IPO investors. The Investors will watch whether the pre-IPO investors offload their positions or continue to hold post the lock-in.
• As per a brokerage report, three other new-age companies (PB Fintech, Delhivery, and Paytm) are also expected to see their lock-in expire in November. Therefore, potential buyers might be spoilt for choice. Hence, there could be a sharp dip in share prices if even a small set of investors decide to liquidate their position.
• The bright side: The lock-in expiry period coincides with the company's earning timeline and strong results might push buyers to take positions in the stock and provide support to the falling price.

Nykaa Share Price: Brokerage View

JM Financial: The firm is bullish on the company as it believes Nykaa still implies a strong valuation compared to most traditional companies but that does not factor in the growth seeds that the firm is planting by investing in fashion and e-B2B segments. It has been given a buy rating with a target price of Rs 1780 per share.

ICICI Securities: Indian brokerage firm has given a HOLD rating with a target price of Rs 1250 per share. Investments in the differentiated value proposition of content, curation, and convenience yield results. They model revenue and core profit CAGRs of 42% and 90%, respectively, over FY22-FY24.

Nomura: The international brokerage firm initiated coverage on Nykaa's share price and has set a target price of Rs 1365 per share. It is unique compared with online companies due to its strong focus on curating brands and helping customers in their discovery journey. Brands see it as a key partner in educating customers and driving the adoption of premium products.