Online fashion and beauty commerce player Nykaa has announced plans to raise Rs 125 crore (approximately $15 million) by issuing non-convertible debentures (NCDs). This strategic financial move was approved by Nykaa’s board, according to a filing with the National Stock Exchange.
Nykaa will issue up to 12,500 NCDs at an issue price of Rs 1,00,000 each, raising the total amount in fully dematerialized form on a private placement basis. The disclosure revealed that these debentures would be issued to a single foreign portfolio investor, whose identity remains undisclosed.
While Nykaa has not specified the exact purpose of this fund-raising exercise, it has indicated that its UAE-based subsidiary, Nysaa Beauty, will receive an investment of $2.5 million in one or more tranches. This investment is likely part of Nykaa’s broader strategy to expand its international footprint and strengthen its subsidiary operations. Currently, Nykaa boasts 14 subsidiaries and one associate company, Earth Rhythm.
Nykaa’s major revenue model includes selling beauty, personal care, fashion, and other products and services across its various platforms. The company has posted robust growth in revenues from operations, which rose by 24.1% to Rs 6,386 crore in FY24 from Rs 5,144 crore in FY23. Furthermore, Nykaa recorded a substantial 90.5% increase in profit, reaching Rs 40 crore in FY24 compared to Rs 21 crore in FY23. The company has provided guidance for a 22-23% sequential increase during the first quarter of FY25.
In a related development, Nykaa announced fresh employee stock options (ESOPs) for its employees ahead of the Q4 results. The expansion of the ESOP pool aims to promote employee ownership and to attract, retain, and motivate talent in line with the company’s growth objectives.
Nykaa’s strategic financial moves, including the NCD issuance and the investment in its subsidiary, underscore its commitment to sustaining growth and maintaining its market presence. The company’s strong financial performance and new initiatives position it as a leading player in the online fashion and beauty commerce market.
A continued ability to innovate and grow will be crucial for Nykaa in the competitive landscape, leaning on significant investments and ensuring strong financial health toward achieving its long-term business goals. Additionally, its focus on employee engagement and international expansion further highlights a holistic approach to growth and sustainability.