The stock also went ex-bonus in trade. The company had announced bonus issue of 5:1 which meant the existing shareholders got five bonus shares for every one share held on the record date
Shares of FSN E-Commerce, the parent of online fashion retailer Nykaa, were witnessing very high trading volumes on Thursday after its mandatory one year lock-in period for investors who were allotted shares before the Initial Public Offering (IPO) ended today.
The stock also went ex-bonus in trade. The company had announced bonus issue of 5:1 which meant the existing shareholders got five bonus shares for every one share held on the record date.
After the bonus share is issued, the stock price is adjusted for the ratio of the bonus. Accordingly, the number of outstanding shares in the secondary market increases and the stock becomes cheaper.
Meanwhile, on the BSE over 2.19 crore shares changed hands compared with an average of 2.26 lakh shares traded daily in the past two weeks. On the National Stock Exchange, over 4.55 crore shares were traded, data from the stock exchanges showed.
The stock fell as much as 7.15 per cent to hit an intraday low of Rs 166.85 before staging recovery in noon trading. The stock recovered intraday losses and was up 1.2 per cent at Rs 182 by 12:44 pm.
Meanwhile, brokerage firm HDFC Securities has come out with a sell rating on the stock citing expensive valuations.
“Nykaa is an efficient online business; its success in part is due to the absence of potent competitors (this is gradually changing). Ex-ad income, lack of non-linear monetisation levers forces us to realign our valuation compass somewhere between a linear business and a pure platform,” HDFC Securities said.
Absence of a potent competitor in beauty and personal care (BPC) e-tailing ensured Nykaa remains over-indexed in BPC ad budgets. This is likely to change with more deep-pocketed e-tailers (AJIO, Myntra, and TATA Cliq Palette) wanting their pound of BPC-related ad income. The Rs 300 crore ad income also means BPC product margins are just about profitable now. (FY22: -1% on NSV) and that its profitability (FY22 EBITDA: Rs 163 crore) seems overly reliant on ad income, the brokerage firm added.
As of 1:06 pm, Nykaa stock traded 0.25 per cent higher at Rs 180, outperforming the Sensex which was down 1 per cent.