Shares of Nykaa‘s parent company FSN E-Commerce Ventures, hit a record low of Rs 161.90 in intraday trade on Monday, down 3% on the BSE, while the market was firm. Shares of the beauty e-retailer fell below the previous low of Rs 162.91 on October 28, 2022. In contrast, the S&P BSE Sensex rose 0.45% to 61,612 at 11:26 am.

Shares of Nykaa fell 5% in the past two sessions after Kravis Investment Partners II sold 36.7 million shares in the company worth Rs 6,290.6 crore in an open market trade at Rs 171 a share in multiple block trades on the BSE, exchange data showed.

On Thursday, December 15, 2022, large investors from the FPI and DII categories purchased new shares in Nykaa. Goldman Sachs, Mirae Asset Mutual Fund, ICICI Prudential Life Insurance Company and Canada Pension Plan Investment Board bought a stake in FSN e-commerce venture capital firm, according to the BSE blockbuster deal details.

Meanwhile, the stock has fallen 16% over the past month following the resignation of the company’s chief financial officer (CFO), Arvind Agarwal stepped down on November 25, Nykaa said in a November 22 regulatory filing.

On the same day, private equity firm Lighthouse India sold 18.44 million shares in the company 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 Society Generale, bought through block trades, the data showed.

Meanwhile, shares in Nykaa have fallen 54% over the past year, while the S&P BSE Sensex has gained 8%, underperforming. It has corrected 62% from its all-time high of Rs 429 on November 26, 2021 (adjusting for a 5:1 dividend stock). Nykaa has become one of India’s leading lifestyle-focused consumer technology platforms.

Shares of local tech start-ups have plummeted since last year’s much-hyped initial public offerings (IPOs), prompting some of them to adopt unexpected strategies to stem the decline, drawing scrutiny from investors and investors, according to Bloomberg. Nykaa’s announcement of a bonus share issue in November, when the IPO lock-in period for major investors expires, could extend the stock’s decline.

According to Bloomberg, some market experts said that while the actions were within the rules, they showed the newly public company’s obsession with its stock price.

“Nykaa is an efficient online business, and its success is partly due to the absence of strong competitors (this is gradually changing). Apart from advertising revenue, the lack of non-linear monetisation levers forces us to split between a linear business and a pure platform. Recalibrating our valuation compass,” analysts at HDFC Securities said in their initial November report 2. The brokerage has a ‘sell’ rating on the stock with a price target of Rs 133 (adjusted for dividends).