When founder Falguni Nayar took the entrepreneurial plunge in 2012, she was nearly 50 with about 20 years of experience as an investment banker. Nearly a decade on, she has listed her startup at a valuation higher than some of the biggest legacy businesses in India.
Graphics: Rahul Awasthi
In the process, she has become
the wealthiest self-made woman in India, is
among the country’s 20 richest people, and worth more than her peers who have either listed their startups or are in the process of doing so. (All of these people are men, save for Savitri Jindal—the richest woman in India—and Mobikwik cofounder Upasana Taku.)
How did she get here? Well, on her own.
Nykaa, in its early years, was funded entirely by Falguni Nayar and her husband Sanjay Nayar, the chairman of private equity major KKR & Co. in India. The focus was on building an inventory-led business, as she said
in a 2017 interview to The Economic Times. “The company ran on family funds for two years because I didn’t want to raise money. I wanted to make the metrics happen,” Nayar had said then. “We had good momentum by the time I went to investors. We had access, since my husband and I were both bankers.”
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The company turned unicorn only in March 2020,
after just five rounds of funding—of which only three involved institutional investors. Nykaa is also profitable—a rarity among Indian startups.
A graduate of the Indian Institute of Management, Ahmedabad, Nayar spent a bulk of her career at Kotak Mahindra Capital Co. When she left in 2012, she was the managing director and head of its institutional equities business.
Born and raised in a Gujarati family, her father ran a small bearings company, assisted by her mother. The household chatter revolved on investments, the stock market and trade. “Plus, I’m Gujarati,”
she said in a 2017 interview. Entrepreneurship, it seems, was in her blood.
For any business, the first year is a honeymoon period—it is easy because you are just designing. The next year, when business starts scaling up, is crucial,
Nayar said in the 2017 interview. “The person heading operations couldn’t cope with 30 orders a day and quit. We had to learn how to dispatch packages and set up an enterprise resource planning system,” she had said then.
Nykaa is among the few profitable etailers in India. It reported a net profit of Rs 61.96 crore in the fiscal ended March 31, compared to a net loss of Rs 16.34 crore in the year-ago period. Revenue grew 38% year-on-year to Rs 2,453 crore in FY21.
Falguni Nayar (second from left), along with her son Anchit (extreme left), daughter Adwaita, husband Sanjay and investor Katrina Kaif at the bell-ringing ceremony of Nykaa parent FSN E-commerce Ventures at the National Stock Exchange in Mumbai on Wednesday, Nov. 10, 2021.
Tier II and III cities are driving growth in the post-pandemic era. According to a source aware of the firm’s metrics, non-metros have seen a sharper rebound in demand than metros. In its DRHP, Nykaa has said Tier II and III cities contributed 64% of revenue in FY21 compared to 59% in FY20. “Being an omnichannel retailer helped us during the Covid-19 crisis,”
Nayar told ET during the peak of the pandemic last year. “We now have 70 stores in 30 cities across the country. We basically pivoted our website to also do hyperlocal deliveries for essential products, but only from our stores.”
The company has diversified as well—from selling third-party beauty products to launching its own brands and entering the fashion business. Fashion is now 20% of overall sales. While its private labels are growing, they are still relatively small.
In the fiscal ended March 31, Nykaa’s gross merchandise value (GMV)—the total value of merchandise sold over a given period of time—jumped more than 50% to almost Rs 4,046 crore.
An IPO, then, was inevitable.
IPO and listing
FSN E-Commerce Ventures, the parent company of India’s biggest cosmetics etailer Nykaa,
launched its IPO on October 28 to raise as much as Rs 5,352 crore by offering shares in a price band of Rs 1,085-1,125 apiece. The issue was
subscribed nearly 82 times.
On Wednesday, Nykaa listed at nearly 80% premium and ended the day 96.15% higher than its issue price at Rs 2,206.70—that translates to a market capitalisation of Rs 1,04,360.85 crore on day one. The Nayar family’s net worth is more than half of that.
“I started Nykaa at the age of 50 with no experience. I hope the Nykaa journey can inspire each of you to be the Nykaa (heroine) of your lives,” Nayar said at the opening bell.