In Nykaa, 67.20% of the outstanding shares will become eligible for trading on November 10
New Delhi:
New-age stock Nykaa gained more than 10 percent in deals this morning, beating market expectations that the stock would come under intense selling pressure.
FSN Commerce Ventures (Nykaa) entered the market on November 10 last year after a successful initial public offering (IPO). The regulations barred pre-IPO investors from trading in shares for a year. It is pertinent to note here that the end of this lock-in will have no impact on the business fundamentals of these startups.
The lifting of restrictions on Thursday had fueled speculation that the stock would come under pressure from pre-IPO investors looking for an exit. In Nykaa, 67.20 per cent of the outstanding shares will become eligible for trading on November 10, according to JM Financial.
The stock moved in line with the broader market which is trading higher by over 1,000 points. Investor sentiment got a boost as easing US inflation numbers raised hopes that the Fed’s rate hike could be the end.
Despite a rise of over 10 per cent today, the current market price of Nykaa is well below the 52-week high of Rs 429.86 recorded on November 26 last year.
Steel’s decline in Nykaa was in line with declines in other new-age tech stocks. Investors have cast doubt on the profitability of valuations of these tech startups.
Earlier in July, another new-age stock Zomato came under heavy selling pressure when the lock-in opened for institutional investors.
The company’s board had earlier approved bonus issue of equity shares in the ratio of 5:1.
“The company believes that the bonus shares will encourage participation from retail investors over the long term, as well as see a broader shareholding,” she had said.
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