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<ul><li><keyword id="1830414" type="General" weightage="20" keywordseo="purplle" source="Orion">Purplle</keyword> is planning to set up its own network of retail stores.</li><li><keyword id="6376684" type="General" weightage="20" keywordseo="nykaa" source="Orion">Nykaa</keyword> has 80 stores across 40 cities, even though they contribute less than 10% to its revenue.</li><li>Purplle recently raised $75 million less than two weeks back, reportedly at a valuation of $500 million.</li></ul>Cosmetics and personal care products ecommerce platform Purplle, which competes with Falguni Nayar-led Nykaa, is planning to set up its own retail stores by March 2022.<br /><br />The company is still at the early stages of executing this plan and will take  concrete steps in this direction by the end this year, Purplle’s Cofounder and Chief Executive (CEO) Manish Taneja told Business Insider. <br /><br />Purplle — which claims to have an annualised revenue of ₹750 crore — will start a pilot programme by setting up 3-4 stores in one city to test out the traction and the impact it has on the business, before making further plans. The company intends to expand the retail store chain further in the next two-three financial years.<br /><br />“I think offline is a huge market and we will love to be a player in it as well... We would like to have a significantly solid play in the omnichannel or offline model,” Taneja added. <br /><br />He believes that the offline stores would help the company get more brand recognition, increase customer’s experience as well as trust. “About 85% of the people in India will still buy offline so why do you leave out that market for someone else,” Taneja said.<br />              <div type="image" title="Half a billion dollar worth Purplle is now taking the next step to take on Nykaa" msid="87669372" hostid="261"></div><br />Nykaa — which listed on the stock exchange on November 10 <a href="https://www.businessinsider.in/stock-market/news/nykaa-starts-trading-at-2001-a-premium-of-77-87/articleshow/87618803.cms">at a premium of 77.8% </a>— also relied on this omnichannel approach to gather more customers’ interest and further boost its reputation. <br /><br />Even though the cosmetics stores make for less than 10% of Nykaa’s overall business, the company still plans to use the proceeds from the recent IPO to set up more retail stores. The company, sitting on a market cap of $14 billion, has 80 retail stores across 40 cities. <br /><br />Anchit Nayar, chief executive of Nykaa’s beauty ecommerce business, previously highlighted that the omnichannel approach is an important one for them especially in the beauty space. It not only allows the customers to physically test out the product, but also leads to greater trust. <br /><br />Both Nykaa and Purplle started off their journey in 2012 and 2011, respectively. <br /> <br />Purplle recently raised $75 million less than two weeks back, <a href="https://www.moneycontrol.com/news/business/startup/exclusive-purplle-eyes-500-million-valuation-amid-nykaa-ipo-7459501.html">reportedly</a> at a valuation of $500 million. It will use this capital to enhance its technology stack and incubating as well as acquiring more smaller startups. The company has already acquired three startups in the beauty and personal care space, namely Stay Quirky, Carmesi, Juicy Chemistry.<br /><strong><br />SEE ALSO</strong><br /><a href="https://www.businessinsider.in/business/startups/news/zomatos-investment-turns-curefit-into-indias-36th-unicorn-of-2021/articleshow/87640767.cms" data-type="tilCustomLink">Cult.fit’s parent company Curefit is the 36th unicorn in town</a><br /><br /><a href="https://www.businessinsider.in/business/corporates/news/zomato-has-closed-all-international-operations-in-uk-us-singapore-and-lebanon/articleshow/87639773.cms" data-type="tilCustomLink">Zomato has officially pulled out of all international markets</a><br /><br /><a href="https://www.businessinsider.in/business/corporates/news/nykaa-is-now-bigger-than-coal-india-britannia-irctc-and-almost-double-of-hero-motocorp/articleshow/87635312.cms" data-type="tilCustomLink">Nykaa is now bigger than Coal India, Britannia, IRCTC and almost double of Hero MotoCorp</a><br />

Half a billion dollar worth Purplle is now taking the next step to take on Nykaa

<ul><li><keyword id="1830414" type="General" weightage="20" keywordseo="purplle" source="Orion">Purplle</keyword> is now valued at over a billion dollars after its $33 million fundraise.</li><li>The unicorn round saw participation from Paramark Ventures, Premji Invest and others.</li><li>The company plans to use this capital for acquisition and fund its inorganic growth plans.</li></ul>Cosmetics ecommerce company Purplle — which competes with Falguni Nayar’s <keyword id="6376684" type="General" weightage="20" keywordseo="nykaa" source="Orion">Nykaa</keyword> — is now valued at over a billion dollars after its $33 million fundraise. With this, Purplle has become the 102nd unicorn in India. <br /><br />The unicorn round saw participation from Paramark Ventures, along with existing investors like Premji Invest, Blume Ventures and Kedaara Capital. It was valued at $1.1 billion.<br /><br />The company plans to use this capital for acquisition and fund its inorganic growth plans. <br /><br />“The infusion is an opportunity to further our mission of building the beauty industry in India with technological investments, scaling of our private brands, and industry-first innovations,” Manish Taneja, co-founder and CEO of Purplle, said.<br /><br />Its competitor Nykaa currently had a market cap of ₹68,377 crore ($8.7 million), as pn June 9.<br /><br />Purplle — Founded by Manish Taneja and Rahul Dash in 2011 — is an ecommerce platform that offers beauty products, appliances and cosmetics.<br /><br />The company had closed a <a href="https://www.business-standard.com/article/companies/beauty-platform-purplle-com-raises-75-mn-from-kedaara-sequoia-and-blume-121102901076_1.html">$140 million</a> in October 2021, <a href="https://www.moneycontrol.com/news/business/startup/exclusive-purplle-eyes-500-million-valuation-amid-nykaa-ipo-7459501.html">reportedly</a> at a valuation of $500 million. It planned to use that capital to enhance its technology stack and incubating as well as acquiring more smaller startups.<br /><br />In January, the company also raised<a href="https://www.businessinsider.in/business/startups/news/nykaas-rival-purplle-raises-38-million-from-pantaloons-ceo-sequoia/articleshow/88953104.cms"> $38 million </a>led by Sequoia Capital. Blume Ventures and Sangeeta Pendruka, the chief executive officer (CEO) of Aditya Birla Fashion and Retail Limited (ABFRL)-owned Pantaloons, have participated in the Series D round.<br /><br />Purplle’s latest funding round was announced only two days after <a href="https://www.businessinsider.in/business/startups/news/physicswallah-is-indias-first-profitable-edtech-startup-up-here/articleshow/92056796.cms">PhysicsWallah became the first profitable edtech</a> to enter the unicorn club. The company has raised $100 million in a Series A round from Westbridge and GSV Ventures, at a valuation of $1.1 billion.<br /><br /><strong>SEE </strong><strong>ALSO</strong><br /><a href="https://www.businessinsider.in/business/startups/news/pepper-content-raises-14-million-to-enter-the-us-market/articleshow/92084581.cms">INTERVIEW: Pepper Content skip the traditional Middle East route, heads directly for the US market</a><br /><a href="https://www.businessinsider.in/business/ecommerce/news/flipkart-has-lived-up-to-expectations-so-far-says-walmart-ceo-confirms-ipo-plans/articleshow/92096890.cms">Flipkart has ‘lived up to expectations so far’, says Walmart CEO, confirms IPO plans</a><br /><a href="https://www.businessinsider.in/business/ecommerce/news/meesho-recorded-5-35-million-orders-during-the-one-day-sale/articleshow/92100754.cms">India's youngest ecommerce giant received more than 60 orders every second during its one-day sale</a><br />

Nykaa competitor Purplle is the latest unicorn after a $33 million fundraise

<ul><li>Purplle has raised ₹257.43 crore ($38 million) in a Series D round.</li><li>The company had closed a $140 million round in November 2021.</li><li>It plans to open its first retail outlet this year and acquire more startups.</li></ul>Cosmetics and personal care products ecommerce platform Purplle, which competes with Falguni Nayar-led <keyword id="6376684" type="General" weightage="20" keywordseo="nykaa" source="Orion">Nykaa</keyword>, has raised ₹257.43 crore ($38 million).<br /><br />The Series D round has been led by Sequoia Capital. Blume Ventures and <keyword id="12971640" type="General" weightage="20" keywordseo="sangeeta-pendruka" source="Orion">Sangeeta Pendruka</keyword>, the chief executive officer (CEO) of <keyword id="3378227" type="General" weightage="20" keywordseo="aditya-birla-fashion-and-retail" source="Orion">Aditya Birla Fashion and Retail</keyword> Limited (<keyword id="3360476" type="General" weightage="20" keywordseo="abfrl" source="Orion">ABFRL</keyword>)-owned Pantaloons, have participated in the Series D round. <br /><br />According to the regulatory filings, Purplle has approved the allotment of 5608 Series D1 preference shares at an issue price of ₹4,59,041 per share. Sequoia has invested nearly ₹238 crore in this round.<br /><br />The development was first <a href="https://entrackr.com/2022/01/exclusive-purplle-raises-fresh-funds-at-over-725-mn-valuation/">reported </a>by Entrackr. The company is now reportedly valued at $728 million. Business Insider has reached out to Purplle seeking confirmation of its valuation.<br /><br />Purplle — Founded by Manish Taneja and Rahul Dash in 2011 — is an ecommerce platform that offers beauty products, appliances and cosmetics. The company had closed a <a href="https://www.business-standard.com/article/companies/beauty-platform-purplle-com-raises-75-mn-from-kedaara-sequoia-and-blume-121102901076_1.html">$140 million</a> in October 2021, <a href="https://www.moneycontrol.com/news/business/startup/exclusive-purplle-eyes-500-million-valuation-amid-nykaa-ipo-7459501.html">reportedly</a> at a valuation of $500 million. It planned to use that capital to enhance its technology stack and incubating as well as acquiring more smaller startups.<br /><br />The company’s founder and CEO Taneja had <a href="https://www.businessinsider.in/business/startups/news/purplle-is-planning-to-set-up-its-own-network-of-retail-stores-as-nykaa/articleshow/87649025.cms">previously told</a> Business Insider that it plans to take a omnichannel approach by setting up retail stores by March this year. “I think offline is a huge market and we will love to be a player in it as well... We would like to have a significantly solid play in the omnichannel or offline model,” Taneja added.<br /><br />He believes that the offline stores would help the company get more brand recognition, increase customer’s experience as well as trust. Nykaa — which was listed on the stock exchange last November — also relies on an omnichannel approach to gather more customer interest and further boost its reputation.<br /><strong><br />SEE ALSO</strong><br /><br /><a class="tout-title-link" href="https://www.businessinsider.in/business/auto/news/tesla-india-prospects-get-a-boost-as-states-compete-with-each-other-to-invite-elon-musk-to-their-backyard/articleshow/88890951.cms">Tesla India prospects get a boost as states compete with each other to invite Elon Musk to their backyard</a><br /><br /><a href="https://www.businessinsider.in/stock-market/news/hcl-technologies-shares-down-7-as-employees-are-leaving-the-firm-at-a-faster-rate-than-ever-before/articleshow/88944681.cms">The street is dumping HCL Tech shares because its employees are leaving at a faster rate than ever before</a><br /><br /><a href="https://www.businessinsider.in/budget/news/even-after-the-lic-ipo-indian-government-may-be-well-short-of-its-divestment-target/articleshow/88938799.cms">Even after the LIC IPO, Indian government may be well short of its divestment target ⁠— for a third year in a row</a><br />

Nykaa's rival Purplle raises $38 million from Pantaloon’s CEO, Sequoia

<ul><li><keyword id="6376684" type="General" weightage="20" keywordseo="nykaa" source="Orion">Nykaa</keyword> was able to increase its revenue by ₹1,300 crore in the fiscal year 2022.</li><li>ICICI Securities anticipates much higher competition for Nykaa in the time to come.</li><li>The brokerage recommends investors to hold on to the stock.</li></ul>Even though Falguni Nayar-led ecommerce titan Nykaa was able to grow its revenue by ₹1,300 crore in FY22, brokerage firm ICICI Securities believes that it is not the right time for retail investors to buy more shares. On the other hand, it isn’t a stock to get rid of either. <br /><br />The brokerage firm raised its target price from ₹1,250 to ₹1,300, while maintaining its ‘Hold’ rating. Nykaa’s shares were trading higher than this target – at ₹1,370 at 10:13 am on Monday, after a marginal rise in the early morning trade. <br /><div type="image" title="Nykaa to face competitive heat but its omni-channel experience maybe the game changer" msid="91883914" hostid="261"></div><br /><cmsannotation type="cmsannotation" annotationid="Nykaa’s top spot might be in danger" comment="subhead" text="Nykaa’s top spot might be in danger"><span data-til="noop">Nykaa’s top spot might be in danger</span></cmsannotation><br /><br />Nykaa’s revenues for the fourth quarter of FY22 were in line with analyst estimates. Yet, competition in the segment is likely to intensify over time. <br /><br />“That said, competition will likely intensify from both vertical and horizontal peers. While we expect BPC [beauty and personal care] revenues to grow, we believe Nykaa’s journey could be different – it will have to go more mainstream to drive this growth (tougher decisions about brand stretch along the way),” ICICI Securities said in their latest report. <br /><br />Apart from traditional players like Amazon, Flipkart and Meesho that sell everything from clothes and cosmetics to groceries to items in the home category, Nykaa also competes with businesses like Purplle that work in the same domain as the company. Purplle is currently valued at over <a href="https://www.businessinsider.in/business/startups/news/nykaas-rival-purplle-raises-38-million-from-pantaloons-ceo-sequoia/articleshow/88953104.cms#:~:text=Business%20Insider%20has%20reached%20out,a%20valuation%20of%20%24500%20million.">$700 million</a>.<br /><br />In the short term, the company also faces the risk of a bad consumer sentiment which can affect discretionary spending - that can impact demand.<br /><div type="image" title="Nykaa to face competitive heat but its omni-channel experience maybe the game changer" msid="91883945" hostid="261"></div><br /><cmsannotation type="cmsannotation" annotationid="‘Nykaa’s strengths can’t be replicated easily’" comment="subhead" text="‘Nykaa’s strengths can’t be replicated easily’"><span data-til="noop">‘Nykaa’s strengths can’t be replicated easily’</span></cmsannotation> <br /><br />The long-term prospects for the company are good. ICICI Securities highlighted that Nykaa is currently functioning in a golden spot with three aspects working in its favour. First, it continues to be the largest beauty and personal care business in India. Second, it has a good profitability metric and prudent capital allocations. Three, it is omni-channel in a true sense. <br /><br />“Its strength of content-driven and inventory-driven models in BPC will continue to be key differentiators – the former is a long-drawn journey and cannot be built by a new entrant just on the strength of capital,” the report added. <br /><br />Nykaa reported a revenue of ₹3,774 crore for FY22, representing an increase of about ₹1,300 crore. Its net profit, however, declined by ₹20 crore during the same time frame. <br /><br />As per ICICI estimates, its revenues could touch a billion dollars in the next two years. In the same time frame, its profits might also grow proportionately, as per the report. <br /><div type="image" title="Nykaa to face competitive heat but its omni-channel experience maybe the game changer" msid="91883950" hostid="261"></div><br /><strong>SEE ALSO</strong><br /><a class="tout-title-link" href="https://www.businessinsider.in/cryptocurrency/news/indian-government-looking-for-ways-to-tax-nfts-as-per-a-new-report/articleshow/91882530.cms" style="">After cryptos, the taxman could come for your NFTs says a new report</a><br /><a href="https://www.businessinsider.in/policy/news/government-withdraws-advisory-on-aadhaar-photocopies-asks-citizens-to-be-cautious-while-sharing-aadhaar-card-details/articleshow/91881948.cms" style="">Government withdraws advisory on Aadhaar photocopies, asks citizens to be cautious while sharing Aadhaar card details</a><br /><a href="https://www.businessinsider.in/careers/news/how-to-apply-isro-free-online-course-and-check-out-eligibility-criteria/articleshow/91831777.cms" style="">ISRO announces free online course for students above 10 years – eligibility, how to apply and everything you need to know</a><em></em><br />

Nykaa to face competitive heat but its omni-channel experience maybe the game changer

<keyword id="868697" type="General" weightage="100" keywordseo="plum" source="Orion">Plum</keyword> – India’s first 100% vegan &amp; cruelty-free beauty and personal care brand, today announced that it has signed actress <keyword id="3063728" type="General" weightage="20" keywordseo="mithila-palkar" source="Orion">Mithila Palkar</keyword> as their brand ambassador. Being one of the most vivacious and spirited actresses, Mithila exemplifies the-girl-next-door image and will appear in key Plum campaigns across digital media. This will be the first time that Plum is getting a brand ambassador on-board.<br /><br />One of the fastest growing BPC brands in the online space, Plum has carved a mark for itself in the retail market as well. Not only is it among the top brands on key ecommerce marketplaces such as Amazon, Flipkart, Nykaa and Purplle , but the brand also is today available in over 250 towns and cities in India, through 900+ assisted retail outlets, and over 10,000 unassisted outlets – growing month-on-month. Recently, the brand also won the Best Vegan Cosmetics award at the PETA India’s Vegan Fashion Awards.<br /><br />Starting her acting career in 2014, Mithila is known for a wide variety of roles that she has portrayed in movies and web series such as, Chopsticks (A Netflix Original film), and <keyword id="2719583" type="General" weightage="20" keywordseo="karwaan" source="Orion">Karwaan</keyword>. She rose to fame after her roles in popular web series Little Things and Girl in the City. She is also a popular singer. In 2016, a YouTube video featuring her performing the popular Marathi song Hi Chal Turu Turu (sung originally by Jaywant Kulkarni) in the cup song style went viral with more than 6 million views.<br /><br />Commenting on the announcement, Shankar Prasad, CEO and founder at Plum, said – “Plum is a youthful brand that resonates with the confident woman of today. So, onboarding a millennial youth icon like Mithila Palkar seemed to be a natural fit. She reflects Plum’s values of being honest and real. Our association with her is a step towards strengthening the connection with our customers and reaching out to millions of more women who will emotionally associate with our brand and love using our products. We are confident that her voice will inspire them to be comfortable in their skincare and beauty choices and we couldn’t be more thrilled to have her as the face of Plum.”<br /><br />On being the brand’s first ambassador, actress Mithila Palkar shares, “I’m really excited to be the face of a brand like Plum that believes in spreading so much goodness around the world. I deeply resonate with the philosophy of the brand and their unique approach towards creating products which are truly good for your skin. In Plum, I have found my partner, which provides an authentic, dependable, efficacious, and delightful experience in skincare. I am truly glad to be associated with them.”<br />

D2C brand Plum ropes in Mithila Palkar as brand ambassador

<ul><li>Nykaa's share prices have crossed the ₹2200 mark, whereas ITC is trying to cross the ₹300 mark, Twitteratis have highlighted.</li><li>The point of contention for this meme is one  — ITC's net profit is much higher than Nykaa's profit.</li><li>Nykaa's profit fell significantly last quarter as Falguni Nayar decided that it was time to acquire new customers.</li></ul>Social media is buzzing with memes asking why Nykaa, a fashion retailer with an annual profit of ₹62 crore (in FY21), is valued more (i.e. at a greater multiple) than ITC, a 111-year old giant that sells cigarettes, consumer goods and hotel rooms, earning a profit of ₹12,934.49 crore in a year.<br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755570" hostid="261"></div><br />The simple answer is, market prices in the future and not the past. But the market can be irrational before it gets the price right. Nykaa’s shares price doubled on the first day of trading, but have started to cool off today. <br /><br />                <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87757344" hostid="261"></div><br />So let’s look at what Nykaa is planning for its future and what the analysts expect the future to look like. Founder and chief executive (CEO) Falguni Nayar is doubling down on the high-margin fashion products, compared to an ITC that wants to move away from cigarettes but the other segments yield very little margin.<br /><br /><table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Metric<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nykaa<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Market capitalisation as of Nov 17<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.03 lakh crore (around $14 billion)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2.94 lakh crore ($39 billion)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY21 EBITDA margin <br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.61%<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8.9%<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimate for EBITDA margin<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">13% FY27 (Bernstein)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">37.4% by FY24 (S&amp;P Global Market Intelligence)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimated revenue growth for next 5 years <br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">65% growth between FY22 to FY27 (Bernstein)<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,85,336 by FY24 (Emkay)<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table><em>*EBITDA stands for earnings before interest, tax, depreciation and amortisation</em><br /><br /><strong>Nykaa Fashion was launched in 2018 as a curated and managed marketplace</strong><br /><br />Nykaa’s profit was down in the three months ending September because Nayar decided now is the time to acquire customers and get them hooked to the brand. It meant spending more on promotions, which would also help sell <a href="https://www.businessinsider.in/business/startups/news/the-cost-of-selling-its-ipo-has-eroded-half-of-nykaas-profit/articleshow/87715261.cms">the IPO at a higher price</a>. <br /><br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755520" hostid="261"></div><br />Nykaa’s marketing expenses surged four-fold but it managed to get 23 million more new users to visit its platform (both fashion and beauty ecommerce verticals) between July and September 2022. The revenue grew nearly 38% compared to the same time last year.<br /><br /><strong>Here’s why Nykaa spending so much building the fashion vertical<br /></strong><br />According to a report by Spark India Consumption, there are several reasons why Nykaa decided to venture into the fashion ecommerce space — including immense market opportunities and the limited competition, especially when it comes to premium clothing brands that sell online. <br /><br />Fast facts about the potential of fashion retail in India<br /><table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Metric<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estimated growth rate<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fashion retail: Market size<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12% compounded annual growth to reach $79 billion till FY19. It declined 35% in 2020 due to the pandemic<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Online fashion retail<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">33% growth in the last 3 years, market size has doubled since 2017<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fastest growing segment<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Footwear and accessories<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total addressable market<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$152 billion<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table><br />Adwaita Nayar, the chief executive of Nykaa Fashion, believes that the trends in the fashion industry change rapidly and therefore an inventory-led model may not work in favour of Nykaa. The same does not stand true for the cosmetics industry. <br /><br />Apart from this, both these verticals cater to the same cohort of customers. Young Indians with “aspirations” and increasing disposable income, a report by Motilal Oswal added. The vertical is set to get a higher tailwind as more young population comes online and the spending capacity in tier-II cities increases, the financial services company added. <br /><br />Nykaa has also been fast to adapt and grab the social commerce opportunity. The company has roped in 1,300 influencers, aside from content marketing, to push its products to peeps on Facebook, Instagram, Twitter and other popular platforms. <br /><br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755491" hostid="261"></div><br />About 2% of Nykaa’s revenue comes from the fashion vertical, as per the company’s red herring prospectus filed last month before hitting the public market. There is a lot of headroom for growth both in terms of revenue and market share. <br /><br />Nayar has also promised that the growth will not be driven by discounts. About 17% of Nykaa’s gross merchandise value (GMV) are sold at full price or at a discount of 10% or lower. Nykaa’s fashion and beauty verticals will move further away from discounts, Adwaita Nayar added in the pre-IPO press conference. <br /><br />But it will be easier said than done. While Nykaa’s cosmetics business is facing competition from Walmart-owned Myntra, Purplle and few other players, its fashion vertical is pitted against e-commerce giants like Amazon, Flipkart, JioMart and more.<br /><br />Despite lower discounts, the company’s average order value was at ₹3,257 in the September quarter across 13 lakh orders. <br />              <div type="image" title="Nykaa vs ITC memes are hilarious but it may not be the right comparison" msid="87755503" hostid="261"></div><br />Is this growth exciting enough to pay more for every dollar profit from Nykaa, compared to legacy companies like ITC? It’s for the investors to decide.<br /><br />Even then, the comparison should not be done with an ITC or Tata Steel, like the memes have . It has to be compared with other players in similar business. Even on that count, Nykaa’s shares may be a bit expensive, according to analysts at Bernstein who shared the following data in a report dated August 2021.<br /><br /><table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Global beauty and personal care brands<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Forward price to sales* (as of Aug 2021)<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nykaa**<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8.5x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">L’Oreal<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.8x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">LVMH<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.1x<br /><br /></td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Estee Lauder<br /><br /></td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5x<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>*Source: Bernstein<br />**The Bernstein report was published before Nykaa’s IPO. <br /><br />The price-to-sales ratio is calculated by taking a company's market capitalisation ⁠— the number of outstanding shares multiplied by the share price ⁠— and divide it by the company's projected total sales for the next 12 months. 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