In recent times, the Indian start-up ecosystem has seen a growing trend of Initial Public Offerings (IPOs), with many new-age companies making a move to the stock market. The latest to join this trend is Honasa Consumer, the parent company of the well-loved brand, Mamaearth.
Honasa Consumer Limited, the founder of Mamaearth, shows a considerable presence in India’s growing beauty and personal care market. Established in the year 2016, Honasa Consumer’s primary objective is to promote the usage of natural, safe, and toxin-free products to a wide audience.
What Did the IPO Have to Offer?
It opened for subscription on Tuesday and will remain open till November 2, 2023. The IPO was priced between Rs 308 and Rs 324 per share, which at the upper end of this range, valued the company at nearly Rs 10,500 crore. Mamaearth intended to raise Rs 1,701 crore with this IPO, which included a fresh issue of up to Rs 365 crore and an Offer for Sale (OFS) of up to 41.2 crore equity shares.
| Parameter | Value |
|---|---|
| IPO Opening Date | 31 October 2023 |
| IPO Closing Date | 2 November 2023 |
| Price Range per Share | Rs 308 – Rs 324 |
| Total Company Valuation | Rs 10,500 crore |
| Total Amount to be Raised | Rs 1,701 crore |
| Fresh Equity Issue | Rs 365 crore |
| Offer for Sale (OFS) | Rs 1,336 crore |
| Total Shares for Offer for Sale | 4.12 crore shares |
| Minimum Bid | 46 shares |
Prior to the IPO, it was announced that Mamaearth was in talks to obtain at least $300 million for the 2023 IPO. As of January 2022, the company was valued at $1.2 billion. Also, before the IPO, Honasa Consumer raised around $92 million in an anchor round, with major investors including the Abu Dhabi Investment Authority and Fidelity.
Investor Options and Share Allocation
The founders, Varun Alagh and Ghazal Alagh, and other investors like Kunal Bahl, Shilpa Shetty, and Rishabh Mariwala wanted to sell some of their shares in this process. People interested in buying shares could start by buying at least 46 shares, and if they wanted, they could buy more.
For individual buyers, the cost to buy the minimum 46 shares started at Rs 14,904 and could go up to Rs 1,93,752 if they decided to buy 598 shares. The shares were divided in such a way that big institutional buyers got 75% of them, non-institutional investors got 15%, and regular individual buyers got 10%.
The company’s employees got a special deal with a Rs 30 discount on each share and a separate bunch of shares worth Rs 10 crore was reserved for them. The money collected from selling these shares was planned to be used for advertising, opening new exclusive stores, investing in a subsidiary called BBlunt for starting new salons, and other general company needs.
Mamaearth IPO GMP
People aren’t showing much interest in buying equity shares in the unofficial market. Experts say that Honasa Consumer Limited’s shares are being sold for 10 rupees more than their regular price in this unofficial market today.
Market Analysts’ Take on the IPO
However, the IPO received a weak response on the first day of subscription. Reports indicated that the subscription was around 12% on Day 1, with a particularly cautious response from retail investors and non-institutional investors. The IPO received mixed reactions from market analysts. While some, like Emkay Global and Sushil Finance, encouraged subscribing to the IPO for those with a long-term view, others were a bit cautious. StoxBox, for instance, suggested avoiding the IPO due to its high pricing. Prashanth Tapse from Mehta Equities suggested a cautious approach, particularly for conservative investors.
Apart from Mamaearth, Honasa Consumer has a portfolio of brands like The Derma Co, BBlunt, Ayuga, Aqualogica, and Dr. Sheth’s. The company saw a significant 58% rise in revenues for fiscal year 2023, although it registered a loss of Rs 151 crore. Revenue from operations increased 49% to Rs. 464 crore in Q1 FY24, while net profit increased to Rs. 9.24 crore, up from a Rs. 2.51 crore loss the previous year.