Nykaa: Led by one of India’s richest woman – Falguni Nayar – beauty e-commerce platform Nykaa (FSN E-Commerce Ventures) made was amongst the many new-age companies that launched their initial public offerings (IPOs) post-Covid in 2021. Shares of the company made their NSE, BSE debut on November 10, 2021 at Rs 2,001, at a 77.87 per cent premium over its issue price of Rs 1,125.
Nayar-led Nykaa stock today trades at around Rs 200 levels due to a bonus issue it had announced in November 2022. Nearly 2 years ago, Nykaa had declared a bonus share issue in the ratio of 5:1, meaning the eligible shareholders received 5 shares for every 1 share held by them as on the record date.
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For instance, the shareholder holding 100 shares of Nykaa prior to the bonus record date would be holding 500 shares after the bonus.
The 5:1 bonus issue is the only corporate action that the company has announced in 3 years of its listing. Nykaa reported a healthy 90 per cent jump in its net profit for the financial year 2024. It posted a 90.5 per cent increase in profit to Rs 40 crore in FY24 from Rs 21 crore in FY23. Despite this, it hasn’t declared any dividend for its shareholders. Why is that so?
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Why has Nykaa not announced a dividend?
In its annual report for the fiscal 2024, the company stated that it has 5,28,173 total shareholders. Nykaa has mentioned that it’s focus is on creating substantial opportunities for capital appreciation and ensuring fair dividend payouts. So, why there was no dividend reward for the shareholders this time?
Nykaa said, “Your Board did not recommend any dividend on the equity shares of the Company for financial year ended March 31, 2024 considering that the Company is in growth stage and requires funds to support its growth objectives.”
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Nykaa Dividend Policy
As per the company’s dividend distribution policy, Nykaa board would consider the following financial parameters while declaring dividend or recommending dividend to shareholders:
• Capital allocation plans or growth plans (both, organic and inorganic) including expected cash requirements towards working capital, capital expenditure in technology and Infrastructure etc.; investments required towards execution of the company’s strategy; funds required for any acquisitions; and any share buy-back plans.
• Financial performance of the Company for the year for which dividend is recommended
• Dividend payout trends
• Tax implications if any, on distribution of dividends;
Cost of raising funds from alternate sources of capital;
• Any interim dividend paid;
• Minimum cash required for contingencies or unforeseen events;
• Funds required to service any outstanding loans;
• Liquidity and return ratios;
Meanwhile, shares of the company settled in the red at Rs 205.85 apiece on BSE on Friday. The BSE 200-listed company has a market cap of Rs 58,814.90 crore.
