Mamaearth IPO: What should you know about it?
Honasa Consumer Ltd, the owner of the popular beauty and personal care brand, is planning to launch Mamaearth IPO. It filed the Draft Red Herring Prospectus (DRHP) for its IPO on December 30, 2022, with SEBI.
Gurgaon-based Honasa Consumer was founded in 2016 by Varun and Ghazal Alagh as a digital-first consumer brand. It has a number of brands within its portfolio including the flagship Mamaearth, BBLUNT, and Aqualogica among others.
How much is the company looking to raise from the IPO? Is it an offer for sale (OFS) or a fresh issue? Who is selling their stake in the company? Let’s find out in this blog.
IPO Details
IPO Date: October 31
Listing date: 10 November 23
Issue Type: Offer for Sale (OFS)
Price range: Rs 308-324
Issue Size: 365 crores
Basis of Allotment: 7 November
Credit of Share: 9 November
Lot size: 46 shares
Mamaearth IPO: Key Points
- Mamaearth IPO Fund Raise Plans: Through the IPO, Mamaearth is looking to raise around Rs 1710 crores
- Issue Details: Mamaearth IPO will consist of a fresh issue of shares worth Rs 385 crores and an OFS of up to 46,819,635 shares.
- Utilization of the Proceeds: Mamaearth intends to use the proceeds from the IPO primarily for advertising to improve its brand visibility. The proceeds will also be used for inorganic purposes and for opening new exclusive brand outlets.
- Mamaearth shareholders existing: Prominent investors like actress Shilpa Shetty Kundra, serial entrepreneur Kunal Bahl, and existing promoters Varun and Ghazal Alagh among others will be selling shares in the IPO. However, notable investor Sequoia Capital will not be selling any shares in the IPO.
| Mamaearth Shareholders | |
|---|---|
| Name of the Shareholders | Number of Equity Shares Offered For Sale |
| Varun Alagh | Up to 3,186,300 Equity Shares |
| Ghazal Alagh | Up to 100,000 Equity Shares |
| Evolvence India Coinvest PCC, invested through its Cell E | Up to 220,163 Equity Shares |
| Evolvence India Fund III Ltd | Up to 862,987 Equity Shares |
| Fireside Ventures Fund | Up to 7,972,487 Equity Shares |
| Sofina | Up to 19,133,948 Equity Shares |
| Stellaris | Up to 12,755,965 Equity Shares |
| Kunal Bahl | Up to 777,672 Equity Shares |
| Rishabh Harsh Mariwala | Up to 477,300 Equity Shares |
| Rohit Kumar Bansal | Up to 777,672 Equity Shares |
| Shilpa Shetty Kundra | Up to 554,700 Equity Shares |
Source: Company DRHP
(Data as of October 27, 2023)
- Financials: Mamaearth's financials have been improving over the past years. While revenues in FY 22 doubled from the previous year to Rs 943 crores, the company moved into profitability too. The company recorded a profit of Rs 14.4 crores in FY 22 compared to a loss of Rs 1,332 crores in FY 21.
Source: Mamaearth DRHP
(Data as of October 27, 2023)
- Valuation: Analysts have frowned upon Mamaearth IPO valuation. The company’s target valuation of about $3 billion results in a mind-numbing PE of 1,714 which is almost 2 times of its recently listed peer Nykaa.
| Mamaearth PE comparison with peers | |
| Particulars | PE |
| Mamaearth | 1500+ |
| Nykaa | 2241 |
| HUL | 56.6 |
| Godrej Consumer | 56.9 |
| Marico | 51.2 |
Source: Media reports for Mamaearth, NSE for listed peer's PE
(Data as of October 27, 2023)
Conclusion
Considering the prolonged winter for tech stocks globally and in India, Mamaearth is being brave by coming up with its IPO in such an environment. The Mamaearth IPO valuation appears to be quite rich and does not have a sustained record of profitability. However, India’s increasing income levels, rising digital penetration, and growth in the beauty and personal care segment can give the company much room for growth in the future.
Disclaimer: This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.
Is Mamaearth a private company?
Gurugram-based D2C babycare and skincare unicorn Mamaearth has converted into a public company as it readies for an IPO. The startup plans to go public in 2023 and will shortly be filing its draft red herring prospectus (DRHP)
What is Mamaearth revenue?
In financial year 2022, the operating revenue of Mamaearth amounted to 9.4 billion Indian rupees. This was an increase as compared to the previous financial year. Mamaearth is an Indian D2C brand that manufactures toxic-free beauty and personal care products.
Is Mamaearth listed in stock market?
No, Mamaearth is not listed in the stock market.
Is Mamaearth profitable?
Profitable start-ups are rather rare, and Mamaearth belongs to this club. It became profitable in FY22, reporting a standalone net profit of ₹19.8 crore. It had posted losses of ₹1,332 crore in FY21 and ₹428 crore in FY20. In the first half of FY23, the company registered a net profit of ₹4 crore.