Samit Vartak of Sage One has given his opinion about Nykaa’s valuation in a Morningstsr Interview:
Have you invested in any of the Initial Public Offer (IPOs) which were listed in the recent bull run?
We have not found the valuations attractive. We liked Nykaa (FSN E-Commerce Ventures). We didn’t like the business models of the remaining tech IPOs. Most of them are loss-making and we don’t know when they will turn profitable.
If we are expecting 25% growth from an already existing listed player then we would expect 30% growth from Nykaa. That means you need to generate 3x in the next three years. We arrived at a fair value of Rs. 1.2 lakh crore market cap three years down the line. But this was the valuation of Nykaa when IPO came out. If we have to make 3x, the entry point has to be at Rs 40,000 crore market cap. So we did not invest in Nykaa. We would like to participate in such businesses but valuations have been a concern. You rarely find good valuations in an IPO.
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