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How Nykaa’s Genius Financial Strategy Backfired? : Nykaa Business case study
On Oct 28, 2021, Nykaa launched went IPO and became a star in the Indian stock market. This was because it was the only ecommerce company to be profitable during that time!! and as soon it got listed, its shares peaked to touch 2574 Rs!!! But in the next few quarters something crazy happened, Nykaa’s profits fell by 96% and stock price started falling!! From its issue price of ₹1,125, Nykaa shares reached a peak of 2574 last year before falling back to 1131Rs. and its just Nykaa but even PAYTM and Zomato which have seen a steep fall in their stock price where by their stocks fell by 77.5% and 46% while making this episode!!! But this is when Nykaa came up with Genius strategy where by they gave out bonus shares of 5:1 to all its investors!!!and this resulted into such a chaos in the market, that While one side they called it a masterstroke and called Falguni maam a genius, on the other side, they called this a corporate governance night mare!! The question is,What is the deal with Nykaa’s bonus shares?Why did it cause such a heated debate among its investors?What is the secret strategy behind this bonus share issue?and as students of business, what are the study materials to help you understand this financial strategy better?