The ₹1,701 crore Mamaearth IPO opened for public subscription on Tuesday, October 31 and will close on Thursday, November 2.
Let’s look at some of the key issues mentioned in the Mamaearth IPO RHP.
About Honasa Consumer
Honasa Consumer Ltd was founded in 2016 by Varun Alagh and Ghazal Alagh. The company claims to be the largest digital-first beauty and personal care (BPC) company in India by revenue from operations for FY 2023.
After launching Mamaearth in 2016, Honasa added 5 new brands to its portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, and built a “House of Brands” architecture.
As of June 2023, the company’s portfolio of brands with differentiated value propositions includes products in baby care, face care, body care, hair care, color cosmetics and fragrances.
Mamaearth IPO Details
Mamaearth IPO issue size is ₹1,701 crore, which consists of fresh issue of shares value ₹365 crore and an offer for sale of 4.12 crore shares from promoters and investors.
Mamaearth IPO price band has been set at ₹308 to ₹324 per share. The IPO lot size is 46 shares and the minimum investment amount required from retail investors is ₹14,904.
Mamaearth IPO offer opened for subscription on October 31 and will close on November 2. Mamaearth shares will list on both stock exchanges, BSE and NSE on November 10.
The company reserved up to 34,013 shares for employees and offered them a discount of ₹30 to the issue price.
Selling Shareholders
Mamaearth promoter Varun Alagh is selling up to 31.86 lakh equity shares, while his wife Ghazal Alagh is offloading 1 lakh shares in the OFS.
Other investors participating in the OFS include Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rishabh Harsh Mariwala, Rohit Kumar Bansal, and Shilpa Shetty Kundra.
According to the details available in RHP, actress Shilpa Shetty has offered to sell 13,93,200 Mamaearth shares in this IPO, which she bought at ₹41.86 per equity share. Mamaearth IPO price band is set at ₹308-324.
Therefore, on an investment of ₹5.83 crore (for the 13.93 lakh shares she will offload), the Bollywood actress is likely to earn around. ₹39.30 crore from this public issue, regardless of the type of listing Mamaearth IPO gets. This is more than 674 times her initial investment of ₹5.83 crores.
Administration
Varun Alagh is one of the promoters of the company. He is the Chairman, Whole Time Director and the Chief Executive Officer of Honasa Consumer Ltd.
Ghazal Alagh, another promoter, is Whole Time Director and the Chief Innovation Officer of the company.
Raman Preet Sohi is the Chief Financial Officer of the company, while Dhanraj Dagar is the Company Secretary and the executive.
Ishaan Mittal is a Non-Executive Director of the company and a nominee of SCI on the Board.
Vivek Gambhir, Subramaniam Somasundaram and Namita Gupta are the Independent Directors on the board of the company.
forces
According to the RHP, some important competitive strengths of the company include:
– Brand building skills and repeatable playbooks
– Consumer-centric product innovation
– Digital-first omnichannel distribution
– Data-driven contextual marketing
– Ability to drive growth and profitability in a capital efficient manner
– Founder-led company with strong professional management
Risks
Some key risks the company faces include:
– Recorded loss is the past and any losses in the future can negatively affect the business
– Experiencing negative cash flow across all its operating, investing and financing activities
– The dependence on third party manufacturers for all products
– The launch of new brands or products that prove to be unsuccessful could affect their growth plans
– Failure to recognize evolving consumer preferences and changing trends in the BPC industry can negatively impact product demand.
Finances
Honasa Consumer’s revenue from operations grew at a CAGR of 80.14% during FY21-FY23, to ₹1,492.75 crore in FY23.
The company’s profitability was inconsistent. It reported a net loss of ₹142.8 crore in FY23 against a profit of ₹15.7 crore in FY22. In FY21, the company posted a loss of ₹1,332.2 crores.
For the April-June quarter of FY24 (Q1FY24), the company’s net profit stood at ₹25.96 crore as compared to a loss of ₹9.3 crore in corresponding period last fiscal. Income from operations during the period rose 49% YoY to ₹464.5 crores.
peers
There are no listed companies in India and globally that have a comparable size of the same industry as that of Honasa Consumer. Therefore, the company did not provide an industry comparison in relation to it.
However, there are listed companies in India that are of larger size with longer operating histories and diverse business models and propositions that operate in the FMCG space, including the BPC segment.
Honasa Consumer considers listed companies as the following its competitors in relation to its BPC product segments:
– Hindustan Unilever
– Colgate Palmolive India
– Procter & Gamble Health and Hygiene
– Dabur India
– Mariko
– Godrej Consumer Products
– To love
– Bajaj Consumer Care
– Gillette India
IPO Target
According to the RHP, out of the total net income of the fresh issue, ₹182 crore will be used for advertising expenditure to enhance the awareness and visibility of company brands; ₹20.60 crore towards capital expenditure to be incurred for setting up a new EBO; and ₹26 crores for investment in the subsidiary, BBlunt for setting up new salons.
Principal Administrators and Registrar
The book-running lead managers of the Honasa Consumer IPO are Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited, and JP Morgan India Private Limited.
The registrar of the offering is Kfin Technologies Limited.