90.5K Shares Allotted by Nykaa Under the ESOP Scheme

Nitin Konde, Varun Bhardwaj

25 Feb 2025 — 3 min read

Nykaa Grants 90.5K Shares Under ESOP Scheme

90,500 equity shares have been distributed by omnichannel cosmetics retailer Nykaa as part of its employee stock option plan (ESOP). Nykaa stated in an exchange filing that the equity shares are allocated following the execution of vested stock options by employees under the company's ESOP Plan. The filing indicated that the allotted equity shares shall rank equally with the existing equity shares of the company in all respects.

Financial Outlook of Nykaa

Nykaa's consolidated net profit increased by 51% to INR 26.4 crore in the third quarter of the financial year 2024-25 (Q3 FY25), up from INR 17.5 crore in the same time last year, driven by robust development in the beauty and fashion sectors. The corporation disclosed its financial results for the quarter ending in December earlier this month. On a quarter-on-quarter basis, net profit increased by 104% from INR 12.97 crore.

Following its impressive performance in the reviewed quarter, broking firm JM Financial maintained its 'BUY' recommendation on the stock, setting a target price (TP) of INR 240, due to the company's capacity to achieve substantial growth in a sluggish market landscape. In the September-December quarter, the company's operational revenue increased by 26.74% to INR 2,267.2 Cr from INR 1,788.8 Cr during the same time the previous year.

It rose sequentially by 20.93% from INR 1,874.7 crore. The company run by Falguni Nayar stated in an investor presentation that its consolidated gross merchandise value (GMV) in Q3 FY25 was INR 4,527.9 Cr, a 25% increase over INR 3,617.9 Cr in the same period last year. In Q3 FY25, sales from Nykaa’s beauty and personal care (BPC) segment surged 27% year-over-year to INR 2,060.01 crore, while Nykaa Fashion persisted as a loss-incurring division during the period. Nykaa Fashion successfully reduced its loss by 12.3% year-over-year to INR 25.41 crore.

Current ESOP Scenario in India

According to a 2024 survey of 160 companies, 78% of them offered employee stock option plans (ESOPs) to their staff, a considerable increase from 59% in 2021. This indicates that ESOPs are becoming more and more popular among startup owners. More firms are now offering ESOPs to all employees, not only senior management, according to a survey done by Saison Capital, XA Network, and Carta. Compared to one in four in 2021, one in three firms now provides these plans to all employees.

Furthermore, the median ESOP pool size grew from 9% in 2021 to 12.6% in 2024, and 90% of founders now talk about ESOPs with candidates during interviews or job offers, up from 75% in 2021. Additionally, the reasons for providing ESOPs have changed; in 2024, 40% of founders cited cost reductions, up from 28% in 2021.

The founders cited the necessity to retain people as the second most important reason for putting these plans into action, behind creating a sense of ownership and company culture. Even with this increase, fewer than 30% of founders still fully understand the complexity of ESOPs, a percentage that hasn't changed since 2021.