Citi Group has initiated selling shares in cosmetics-to-fashion retailer Nykaa. The shares are worth 250 crore INR via a block deal. The news was reported on November 9.
The News channel has mentioned that the block deal involves individual employee sellers and added that the newly launched deal has resulted in a discount of two percent on the current market price offered for the stakes.
The report has been displayed amidst the stocks of FSN E-commerce Ventures Ltd. the parent company of Nykaa taking a fall in the stock market.
The shares in November are aggregated at 1060.30 a piece at the NSE. The accounted value is 6.34 percent lower than what was recorded the previous day. The share closed at 1076 per stake at the BSE, which was down by five percent against the closing price.
It has been mentioned that the lock-in period for Nykaa will expire by November 10. During the period, the investors and the stakeholders will not be allowed to liquidate the pre-IPO stocks owned by them.
Nykaa’s founder and chief executive officer Falguni Nayar, mentioned during the post-earnings analysts call last week that the high net-worth individuals who were the early investors of the IPO in Nykaa tend to be long-term investors.
When she was questioned if the pre-IPO investors are likely to hold or sell their stake, she mentioned that they would not be able to comment in this regard and that they are not known about the decision that the investors make.
How has the block deal affected Nykaa’s profit?
Nykaa accumulated a net profit of 5.19 crore INR during the quarter, which ended on September 30. The numbers signify an enormous increase compared to the 1.17 crore INR recorded in profits a year ago.
Nykaa’s consolidated revenue has jumped from 885.26 crore INR to 1230.8 crore INR in the operations sectors, which recorded an increase of 39 percent in the same quarter of the last fiscal.
The shares of the FSN e-commerce, the parent company of Nykaa, declined rapidly to seven percent while it gained 3.05 percent in the early morning deals to the BSE.
The fall has been showcased after the Citi group completed the block deal to sell 0.6 percent equity or shares. The shares were worth 306 crore INR, 176 lakh shares with an average of 172 lakh shares changed hands in the trade.
The block deal involves individual employee sellers and would enable a two percent discount from the current market price.
Nykaa has visualized a decline of 7.15 percent as the one-year lock-in period expired for the pre-investors in the previous season. The decline triggered selling pressure on the counter.
Recently, on October 10, the fashion and e-commerce retailer declared a bonus issue in the shares in the ratio of 5:1.The decision states that the investors holding one share of Nykaa will be entitled to five shares of the IPO.
A block deal is defined as a trade wherein more than 500,000 shares or shares worth five crores INR are listed in the market for exchange. Block deals are conducted on a particular trading window and for a limited percentage. Block deals may be conducted in the range of 1 to -1 percent of the current market price or the closing price of the previous day.
The deals can only take place if both parties agree on buying or selling shares at the aforementioned price.
Block deals were introduced by the Securities and Exchange Board of India to increase transparency and clarify and explain the reasons behind the increase in the stocks of a company.
The disclosures allow the users to know about the reason behind the increase in the stock price. It makes it evident to the investors in what aspects are the sectors gaining momentum and where is the drawback behind purchasing stocks. Apart from that, block deals provide investors to purchase or remain invested in such stocks.
Edited by Prakriti Arora