Shares of Nykaa‘s parent FSN E-Commerce Ventures fell 3% to Rs 169.30 on the BSE, a day after the company’s Chief Financial Officer (CFO) Arvind Agarwal resigned. The beauty e-retailer said in a regulatory filing after market close on Tuesday that Agarwal would leave the company and resign on November 25. The stock was down for a third straight day, down 12% over the same period.

On Tuesday, private equity firm Lighthouse India sold 18.44 million shares in FSN E-Commerce Ventures worth Rs 336 crore in a block deal. Domestic mutual funds, including Aditya Birla Sun Life Mutual Fund, Axis Mutual Fund, ICICI Prudential Mutual Fund and foreign portfolio investors such as Bank of America Securities, BNP Paribas Arbitrage and Societe Generale bought through block trades, the data showed.

Meanwhile, Nykaa has underperformed over the past three months, falling nearly 25%, while the S&P BSE Sensex gained 4%. Moreover, the stock has fallen 52% over the past year, while the benchmark index has gained 5%. It has corrected 60% from its all-time high of Rs 429 on November 26, 2021 (adjusting for a 5:1 dividend stock). The stock hit an all-time low of Rs 162.59 on October 28, 2022.

According to analysts at HDFC Securities, Nykaa has the potential to be a hybrid, but as of right now (85% NSV – mostly equities), it has more to do with a busy, efficient, linear online pipeline than a platform Common feature.

Nykaa’s total addressable market (TAM) also appears to be oversold. Therefore, the valuation template must be readjusted accordingly. Sales/EBITDA/PAT CAGR of 35%/65%/113% in FY22-25 and full return in FY25 (from 5% to 15% in FY22-25).

Nykaa is an efficient online business that owes its success partly to having no serious competitors (this is slowly changing). In its preliminary report dated November 2, 2022, the brokerage said that ex-ad revenue and the lack of non-linear monetization leverage forced us to readjust our valuation compass between linear businesses and pure platforms.