Shares of FSN E-Commerce Ventures Ltd., owner of beauty e-retailer Nykaa, has been under pressure since lock-up ended last week. Nykaa shares fell 4% to ₹171 at day's low, extending the four-day losses to about 20%. According to NSE data, Lighthouse India sold 96,89,240 shares on 10th November at average price of ₹171 per share. Among other major sellers, Segantii India Mauritius sold 33,73,243 shares at average price of ₹199 on 15 November.
Stocks often fall after lock-ups expire, as investor selling puts downward pressure on shares. Food-delivery company Zomato Ltd. had plunged to a record low in July when a lock-up on its shares expired. Since Nykaa's bumper market debut in November last year, its shares have tumbled to drop below their IPO price.
Nykaa's gross merchandise value (GMV), or the monetary value of orders across its platforms, jumped 45% to 23.46 billion rupees. GMV from its fashion business jumped 43%, while that from its mainstay beauty and personal care business rose 39%. The company struck an alliance in October with Dubai-based lifestyle and fashion conglomerate Apparel Group to expand in the Gulf region.
Commenting on the selling pressure in internet stocks, VK Vijayakumar, chief investment strategist at Geojit Financial Services, said now there is high activity in some of these stocks where the lock-in period of initial investors is ending. There is huge supply and high volatility in their stock prices. Some like Nykaa are profitable. Some of these stocks have a long runway of potential high growth over many years. Some of them may turn out to be big wealth creators in the long run. So, this segment may be keenly watched."
Meanwhile, shares of One 97 Communications Ltd., the parent of Paytm, plunged 10% today after a unit of Japan’s SoftBank Group Corp. offered to lower its stake in the company. About 29.5 million shares, equivalent of 4.5% of the Paytm shares, were traded in a single block on National Stock Exchange, according to data compiled by Bloomberg.
In the September quarter, Nykaa had reported net profit of about ₹5 crore, helped by strong demand heading into the festive season. Revenue rose 39% to ₹1231 crore.