Company and IPO Overview:
Mamaearth's parent company is set to launch its IPO.
Established in 2016, Honasa Consumer sells beauty and personal care products via its online platform. The company was founded on the principles of Honesty, Natural Ingredients, and Safe Care. As of June 30, 2023, the company's diverse product range includes baby care, skincare, body care, hair care, cosmetics, and fragrances.
At present, Honasa Consumer provides its services to more than 500 cities across India. This company has played a crucial part in the development of multiple consumer brands such as Mamaearth, The Derma Co., Aqualogica, Dr. Sheth's, and Ayuga. Additionally, it has recently acquired stakes in BBLUNT and the content platform Momspresso.
Honasa's primary goal is to create products that address the beauty and personal care concerns of consumers. Their flagship brand, Mamaearth, focuses on providing safe and natural products, particularly toxin-free beauty items made from natural ingredients. Honasa ranked second amongst the digital-first BPC companies in India in terms of gross profit margins in the Financial Year 2022, and it was one of the two digital-first BPC companies in India with a positive adjusted EBITDA margin and share-based payment expenses (cash settled) in the Financial Year 2021.
Mamaearth IPO is also a main board IPO which is ready to go public, the company is about to raise around ₹ 1701 crores via IPO comprising Offer For Sale (OFS) upto Rs 1336 crores and Fresh Issue upto Rs 365 crores. The price band of the issue is ₹ 308 to ₹ 324 with a minimum market lot of 46 shares. Mamaearth IPO subscription quota for retail is 10.00%, NII is 15.00% and QIB is 75.00%. The company is also allowing an employee discount of Rs 30 per share.
Financials (rounded off):
Date | Total Revenue (₹ in cr) | PAT (₹ in cr) |
31/03/2021 | 472 | (1332) |
31/03/2022 | 964 | 14.5 |
31/03/2023 | 1515 | (151) |
Objectives of the Issue:
1. To fund advertising expenses to increase awareness and visibility of the company’s brands.
2. To fund capital expenditure for setting up new EBOs.
3. To invest in the Subsidiary, Bhabani Blunt Hairdressing Private Limited ("BBlunt") to set up new salons.
IPO Details:
IPO Date | 31/10/2023-02/11/2023 |
Face Value | ₹10 per share |
IPO Price Band | ₹308-₹324 per share |
IPO Lot Size | 46 Shares |
Listing at | NSE, BSE |
Basis of Allotment | 07/11/2023 |
Credit of Shares in Demat | 09/11/2023 |
Listing Date | 10/11/2023 |
Pre-Issue Shareholding | 37.41% |
Post-Issue Shareholding | 35.34% |
Retail Minimum Lot Size | 46 shares (₹14,904) |
Important things to note about the Company:
Risk Factors to watch out in the IPO:
1. Honasa Consumer depends significantly on a limited range of products for a substantial portion of its revenue.
2. Past financial records indicate that Honasa Consumer has faced periods of losses and the company has encountered negative cash flows from its operational, investment, and financing activities.
3. The majority of the company's revenue is generated from the sale of products under its flagship brand, Mamaearth.
4. No real MOAT (winning advantage for the firm (at least as of now). They are heavily dependent on platforms like Amazon, who can easily replicate their products.
5. The reliance on celebrities and social media influencers as integral components of the company's marketing strategy could potentially have adverse effects on its business and demand for its services.
6. Intense competition in its industry poses a risk of market share reduction for the company.
7. Subsidiaries acquired by the company in the past, such as Just4Kids, BBlunt, B:Blunt Spratt, and Fusion, have reported losses during certain periods in their history.
8. The company and its subsidiaries currently have pending litigation against them.
Crisp Insights:
Mamaearth IPO GMP Today: The Company is commanding NO GMP.
Mamaearth GMP is NIL and is likely to list at a discount.
Mamaeath IPO Review: Overall, the business does not offer much to entice investors, given its high valuation, significant losses despite substantial revenue, and dependency on third parties for manufacturing and sales. Not saying this is a pump and dump. But, with such high valuations you are buying a story, not a business. If you are investing, please go by numbers or some kind of business analysis.
Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.
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