Honasa Consumer Ltd, the parent company of Mamaearth, is gearing up to launch its initial public offering (IPO) on October 31. For potential investors, here are the key details to consider.
The IPO subscription window will be open from October 31 to November 2, with the anchor book opening a day earlier on October 30.
The price range for the shares has been established between Rs 308 and Rs 324 per share.
This IPO comprises a fresh issuance of equity shares valued at Rs 365 crore, along with an offer-for-sale (OFS) segment of Rs 4.12 crore equity shares by promoters, investors, and other selling stakeholders. If the upper end of the price range is reached, the IPO is anticipated to amass Rs 1,701.44 crore.
At this valuation, the company’s market capitalization will stand at Rs 10,424 crore.
Noteworthy participants in the OFS include co-founders Varun Alagh and Ghazal Alagh, as well as investors like Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, Rishabh Harsh Mariwala (son of Harsh Mariwala, Founder and Chairman of Marico), and Bollywood luminary Shilpa Shetty Kundra.
This IPO presents an opportunity for investors to partake in the growth story of Honasa Consumer Ltd and its renowned brand, Mamaearth.
Shilpa Shetty is selling 1,393,200 shares at an average acquisition cost of Rs 41.86. Snapdeal co-founders, Kunal Bahl and Rohit Bansal, who invested in Honasa in 2018, will each sell 1,193,250 shares acquired at Rs 3.21, resulting in over 100x return on investment. Marico’s Rishabh Harsh Mariwala, with an average acquisition cost of Rs 6.05 per share, is set to gain a 53x return.
More Details on Mamaearth IPO
The IPO encompasses a new issuance of Rs 365 crore and a offer to sell up to 41.25 million shares. At the higher price range, the company is set to raise approximately Rs 1,701.44 crore, bringing its total valuation to Rs 10,424.53 crore. Apart from the individuals mentioned earlier, Varun Alagh, Ghazal Alagh, Fireside Ventures Fund, Sofina, and Stellaris are also participating as selling shareholders in the OFS.
Co-founders Varun Alagh and Ghazal Alagh have a minimal acquisition cost, as per the prospectus. Fireside Ventures Fund acquired at Rs 7.33, indicating a 44.2x gain at the upper price band. Stellaris’ acquisition cost mirrors that. Meanwhile, Belgium-based Sofina fund’s average acquisition cost was Rs 112.07, suggesting a return on investment of about 3x.
Honasa Consumer, the owner of brands like Mamaearth, The Derma Co, Aqualogica, Ayuga, and BBlunt, asserts itself as the largest digital-first beauty and personal care (BPC) company in India, boasting significant revenue for FY23. Its operational revenue exhibited a robust CAGR of 80.14 percent from FY21 to FY23, culminating in Rs 1,492.75 crore in FY23. However, the company reported a net loss of Rs 142.8 crore in the fiscal year ending March FY23.
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As per the reports – Analysis of Mamaearth’s IPO reveals that, as per the draft red herring prospectus (DRHP), the offering comprised a new issuance of equity shares valued at ₹400 crore, along with an offer-for-sale (OFS) of 4.68 crore equity shares by promoters, investors, and other selling stakeholders.
During today’s press conference, when asked about the reduction in the offer, the company explained that they believed the OFS portion might not be as enticing to investors at this valuation. However, contrary to their expectations, investors expressed interest in purchasing, prompting the decision to scale down the IPO’s size. This emerged as the primary driving factor behind the adjustment.
“As the management team believed that, at this point in time, roughly ₹370 crore in primary funding would be sufficient to support the organisation’s growth during the following phase, the business, as you are aware, currently has net invested capital. And that again reveals the business’s capital-light and capital-efficient models as well as its capacity to generate growth while utilising very little capital and expanding at the same rate. These are two aspects that, when considered together, indicate once more how strong the investment thesis is, how strong the company is, and how confident current shareholders are in the company’s future prospects,” a banker stated (Mint reports).