Mamaearth IPO: Pricing Details, Valuation, and Growth Strategy Revealed
- ByStartupStory | October 27, 2023
Mamaearth, has disclosed the price band for its upcoming initial public offering (IPO), ranging from Rs 308 to Rs 324 per share. This pricing results in an issue size of up to Rs 1,701 crore at the upper end of the band.
The IPO is set to commence on October 31 and encompasses a fresh issue of shares valued at Rs 365 crore, along with an offer-for-sale (OFS) of Rs 1,336 crore. The bidding process for anchor investors will initiate on October 30.
Comparatively, when Honasa Consumer issued its draft red herring prospectus in December of the previous year, the company initially planned for a fresh issue of Rs 400 crore. The OFS component, initially targeted at 46.82 million shares, has been scaled down to 41.25 million.
At the upper end of the price band, the company’s valuation is approximately Rs 10,425 crore, equivalent to around $1.25 billion. This valuation is slightly higher than the $1.15 billion valuation at which the company last secured private funding in January 2022.
Key investors in the company, including Stellaris Venture Partners and Sofina, are set to divest stakes valued at up to Rs 355 crore and Rs 310 crore, respectively. Fireside Ventures will sell shares valued at up to Rs 258 crore, and Marico’s Rishabh Mariwala will divest his stake valued at up to Rs 185 crore. Other selling shareholders include Snapdeal co-founders Kunal Bahl and Rohit Bansal, along with actress Shilpa Shetty Kundra.
For public investors, bids can be made for a minimum of 46 equity shares, with multiples of 46 equity shares thereafter. The company also offers a Rs 30 per equity share discount to eligible employees participating in the employee reservation portion. Honasa has reserved Rs 1 crore worth of shares for its employees. The IPO allocates up to 10% of the issue size for retail investors, with 15% allocated to high net worth individuals (HNIs), and the remaining 75% reserved for qualified institutional buyers (QIB).
Financial Overview:
For the quarter ending on June 30, Honasa Consumer reported revenue from operations amounting to Rs 464.49 crore, marking a 49% increase compared to the same period in the previous year. The net profit for the same period reached Rs 24.7 crore, a significant improvement from a loss of Rs 11.5 crore a year ago.
In the fiscal year 2023, the omnichannel retail company reported a net loss of Rs 150.97 crore, as opposed to a net profit of Rs 14.44 crore in the fiscal year 2022. However, its operating revenue increased by 58% year-on-year to Rs 1,492.75 crore.
Ghazal Alagh, Cofounder and Chief Innovation Officer of Honasa Consumer, clarified that the annual loss in fiscal year 2023 was primarily due to an exceptional item, and the company operated profitably during that period. She explained that the exceptional item was related to the full impairment of the company’s content platform, Momspresso, which was closed down in the previous year.
Growth Strategy:
Honasa Consumer manages six brands, including Mamaearth, The Derma Co, Bblunt, Ayuga, Aqualogica, and Dr Sheth’s. Mamaearth is the flagship brand and contributes the highest revenue for the Gurugram-based company. For the June quarter, Mamaearth reported operating revenue of Rs 303.63 crore, accounting for 67.1% of the total revenue from operations.
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In the near term, the company is focused on expanding its younger brands, while Mamaearth will remain a prominent brand. Mamaearth plays a central role in the company’s offline strategy, considering that a significant portion of beauty and personal care transactions still occur offline. The company aims to target early adopters for its newer brands, such as Aqualogica and Dr Sheth’s, who are more likely to make online purchases.
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