Nykaa's Dares And Distractions
Fortune India|December 2021
Its dazzling debut in the stock market has taken corporate India by storm. Will beauty and fashion unicorn Nykaa be able to sustain its fairy tale success story?
Ajita Shashidhar

At 58, when most professionals are in the twilight of their career, Nykaa founder, Falguni Nayar, has scripted a new success story — the company’s stellar IPO has made her one of the richest Indians with a net worth of $7.48 billion. At a market cap of $13.99 billion, Nykaa is valued higher than legacy firms such as Coal India, Godrej group and even Bharat Petroleum.

India’s online beauty and personal care penetration being as low as 8%, Nykaa, the market leader, has a vast opportunity to grow. But analysts and industry observers consider its fashion business the greatest distraction. Having entered the business in 2018, Nykaa is clearly a late comer. It will have to battle it out with the likes of Myntra and Ajio, which have already made considerable inroads. It will also need to create a USP in fashion. Many customers, according to analysts, say they are not aware that Nykaa has fashion offerings, or that there is anything different that the unicorn offers in fashion that others don’t. Reliance’s Ajio, for instance, has leading global fashion brands as well as Indian designer brands such as Tarun Tahiliani and Ritu Kumar in its kitty. It is tying up with premium brands to add to its margins. Moreover, unlike premium beauty, mass fashion is a low-margin business and that could put pressure on Nykaa’s profitability.

The other dampener, if not managed well, could be the 73 physical stores. They are capital and cost guzzlers and their proliferation will have an impact on Nykaa’s margins. Analysts are also unsure whether the company’s brick-and-mortar strategy would yield returns in the long run. In fact, Nykaa’s competitor Purplle.com’s physical store strategy backfired and the company had to exit the space.

Fashion: The Stumbling Block

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM FORTUNE INDIAView All

Payments Banks' Trial By Fire?

Contrary to market perception, payments banks such as fino and airtel have turned profitable.

6 mins read
Fortune India
May 2022

Learning To Live With FinTech

It Takes Two To Tango, And Banks And Fintechs Are Increasingly Realising This. While Such Tie-ups Help The Former Slash Operational Costs, For The Latter, It Promises Access To A Wider Universe. In The End, It's A Win-win For Both.

10+ mins read
Fortune India
May 2022

India Inc's Tryst With Metaverse

Large Companies, Platforms, And Enablers Are Tapping An $8 Trillion Global Opportunity. Can It Live Up To The Promise?

10+ mins read
Fortune India
May 2022

Credit Suisse: India Adds To Global Balance Sheet

While The Switzerland-based Bank Is Facing Several Odds In Its Global Operations, The Indian Business Has Managed To Scale Up Considerably.

2 mins read
Fortune India
May 2022

India's D2C Brand Sweep

Brand-starved Bharat is fast embracing digital-first 'direct to consumer' brands. As competition heats up, it's financial heft and offerings that will differentiate. Who's ready?

10+ mins read
Fortune India
May 2022

PATHLABS: LIFE BEYOND COVID

Diagnostic chains reported bumper revenues and valuation during Covid-19 waves. Can they deal with the ebb to retain investor interest?

9 mins read
Fortune India
May 2022

GLOBAL SOVEREIGN DEBT TRAP

At $300 trillion of global debt, a 1% hike in interest rates could translate into $3 trillion additional interest outgo, equivalent to India's nominal GDP.

6 mins read
Fortune India
May 2022

DIGITAL AGILITY WILL DECIDE BANK WINNERS

WHILE DATA AND DIGITAL WILL DRIVE GROWTH, TRUST WILL BUILD A STRONG CUSTOMER BASE.

2 mins read
Fortune India
May 2022

SMALL FINANCE BANKS IN A LEAGUE OF THEIR OWN

SFBs ARE TAKING FINANCIAL INCLUSION BEYOND ACCOUNT OPENING AND CREATING INCOME OPPORTUNITIES IN REMOTE AREAS.

7 mins read
Fortune India
May 2022

THE BANKERS WHO SAW TOMORROW

THE MAIDEN FORTUNE INDIA-GRANT THORNTON BHARAT STUDY ON INDIA'S BANKS SHOWS WHAT IT TAKES TO WIN IN BANKING SWEEPSTAKES.

4 mins read
Fortune India
May 2022
RELATED STORIES

Mona Kattan

The co-founder of a megabrand, the US-Iraqi beauty mogul tells HELLO! how she built her career one product and perfume at a time

3 mins read
Hello! India
April 2022

D2C 2.0: Digital, phygital, and beyond

Five years ago, Fireside Ventures was set up with the vision of creating iconic digital first brands.

3 mins read
Entrepreneur magazine
May 2022

Nykaa makes investments in Earth Rhythm, Nudge Wellness, Kica Active

ACQUISITION OF THE Indian activewear brand – Kica, a partnership with direct to customer brand incubator, Onesto Labs, to create a new category of nutraceuticals and wellness products, and a partnership through a minority stake in Earth Rhythm, which is a science-focused beauty brand with an active focus on research-based and results-oriented products; were the three strategic announcements made by Nykaa Fashion on Friday.

1 min read
Financial Express Mumbai
April 23, 2022

MOST INFLUENTIAL WOMEN - THE ILLUSTRIOUS

The world today is much fairer than before. We believe we are inclusive and value equality. But the truth of the matter is that there’s still a long way to go

10+ mins read
Businessworld
March 26, 2022

HER DAWN

Women in India no longer shy from achieving their dreams, making bold choices and breaking barriers in every field. There is no glass ceiling; only the open sky for them. Meet a bunch of women who are leading by example

10+ mins read
THE WEEK
March 13, 2022

The KPI conundrum for tech start-ups

Tech start-ups do not reveal important numbers to back their narratives of consumer flywheels and unrelenting growth

5 mins read
Business Standard
February 28, 2022

Beauty, personal care segments shrug off Omicron wave

Companies post strong growth in Q3; competition heats up as ABFRL, TCNS Clothing enter space

2 mins read
Business Standard
February 23, 2022

Nykaa's net profit declines 59% to ₹28 cr 

QUARTERLY RESULTS

1 min read
The Morning Standard
February 10, 2022

CHANGING SCENARIO OF RETAIL & E-COMMERCE

Ever since the coronavirus pandemic, the retail and e-commerce sectors have witnessed tectonic shifts in terms of commerce and business. During the pandemic, the retail industry was inclined towards necessities and basics as the coronavirus ensured that such utilities never be out of fashion, but as vaccination picked speed and the festive season came closer, consumers dedicated their spending to revenge expenditure in travel, shopping, outings and more.

3 mins read
Business Of Fashion
January 2022

BharatPe co-founder on leave till Mar

FINTECH firm BharatPe’s CoFounder and MD Ashneer Grover has taken voluntary leave from the company till March-end.

1 min read
The New Indian Express Chennai
January 20, 2022