Indian Skincare startup Mamaearth hopes to raise a $3 billion valuation in the 2023 IPO
- ByStartupStory | June 22, 2022
According to a Reuters report, the direct-to-consumer (D2C) skincare and beauty company Mamaearth is negotiating to raise about $300 million in an IPO scheduled for the next 12 to 15 months and is requesting a valuation of about $3 billion. When it raised new capital in January 2022 from investors such as Sequoia and Belgium’s Sofina, the Indian skincare business supported by Sequoia Capital was last valued at $1.2 billion.
According to the report, Mamaearth is aiming for a valuation of about $3 billion, or 10 to 12 times the expected earnings. This price is based on sales growth and future revenue possibilities. By the end of 2022, it intends to submit drafting regulatory papers. The skincare business is in the early stages of negotiations to fund $350 million through its initial share offering, which would bring in close to $300 million.
Mamaearth, a company that offers “toxin-free” products like face washes, shampoos, and hair oils, has gained popularity in India since its founding in 2016. It faces competition from Procter & Gamble Co. and Hindustan Unilever, a division of Unilever that operates in India. Mamaearth’s IPO aspirations coincide with a general downturn in the financial markets and a slowdown in the vibrant startup scene in India, which last year saw a record-breaking $35 billion in funding. Some startups are currently making employee reductions and having trouble raising money.
Former Hindustan Unilever executive Varun Alagh and his wife Ghazal are the co-founders of Mamaearth. The pair has benefited from the expanding e-commerce usage in India by selling its products on websites like Amazon and Walmart’s Flipkart. The brand is supported by well-known Bollywood celebrities.
The success of Mamaearth’s IPO, according to one stock research expert, may depend on how it intends to quickly grow into offline sales, though. The majority of Indians still shop at physical stores, with only 5–6% of purchases made online. Mamaearth’s CEO Alagh stated in January that online platforms accounted for 70% of the company’s revenues, but the company was hoping to establish a stronger offline presence by reaching 40,000 retail locations in 100 cities this year.
One of the three sources claimed that Honasa Consumer Pvt Ltd, the parent company of Mamaearth, reported revenue of $130 million and a small profit for the fiscal year that ended in March 2022. Despite the Covid-19 pandemic, MamaEarth expanded at a blistering rate and achieved profitability in the fiscal year that ended in March 2021. The startup reported a 246 million post-tax profit. Mamaearth has established operations outside of India in Nepal, Bangladesh, and Sri Lanka, and it is about to do the same in the Middle East.
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