For a few months after Nykaa listed at an 80% premium to its issue price in late 2021, it looked like a lifeboat paddling away from the Titanic, lest the sinking sentiments on the bourses should suck it down along with them. It seemed the beauty-and-personal-care e-tailor could do no wrong; brokerages could not be more optimistic. Nykaa navigated the choppy waters much better than its ‘tech’ peers. And then the Titanic effect caught up. In the past three months, its share price has plunged ~35%, faring much worse than those of Paytm and Zomato. Only the logistics company Delhivery’s share price looks more humble than Nykaa’s. Last week alone, Nykaa slid 13%, even as the benchmark Nifty 50 index remained flat. Nykaa is now worth $4.4 billion—less than one-third of its market capitalization days after its listing. We at The MMS tracked and follows retail and e-commerce closely, Nykaa’s “investors will hope that the stock’s current woes are courtesy of the lingering effects of the lock-in expiry and the slowdown in discretionary spending. But the company is likely to face more scrutiny over its business in the coming quarters than when it went public.” There are analysts who are still optimistic and consider its fashion vertical to kick in high gear - and then there are analysts who think it stands a flimsy chance before the more established incumbents. Besides, the ‘tech’ tag carries its own burden of expectations. If Nykaa entered the arena to play by the tech-valuation rule, it will also have to demonstrate its tech chops. Five years into the business, Nykaa is discovering that “fashion is the ultimate discovery problem”.
