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  • Writer's pictureJatin Agarwal

Mamaearth IPO: Worth the $3 billion valuation?

Updated: Jan 4, 2023

Company Overview:

Mamaearth was founded in the year 2016 by Ghazal Alagh and Varun Alagh, to make skincare solutions with utmost care. Headquartered in Gurugram, Mamaearth identifies itself in the cosmetic industry of India as an online platform that provides natural and toxin-free skin care products. Mamaearth offers products that are safe as per international standards and comes with the freshness and goodness of nature. Mamaearth is often identified as the 1st Asian brand with the ‘MADE SAFE’ Certification.

Mamaearth was the first unicorn as well as a profitable company in the year 2022. Mamaearth is the largest digital-first beauty and personal care (BPC) company in India in terms of revenue from operations for FY 2022.

The company has added five new brands to its portfolio, namely: The Derma company, Aqualogica, Ayuga, BBlunt, and Dr. Sheth’s, As of 30 September 2022, its portfolio of brands with differentiated value propositions comprises products in the baby care, face care, body care, hair care, color cosmetics, and fragrances segments.

Mamaearth Founders and Co-Founders:

Mamaearth Co-Founders, Ghazal Alagh and Varun Alagh incorporated Honasa Consumer Private Ltd as the parent company in 2016 and then Mamaearth’s range of toxin-free products in December of that year.

About Varun Alagh:

Varun Alagh is the Chief Dad of Mamaearth, he is from the FMCG industry. Varun Alagh has a BE in Electrical Engineering from Delhi College of Engineering, followed by an MBA in Finance and Marketing from XLRI Jamshedpur. Varun has previously worked in Hindustan Unilever, Smirnoff, and The Coca-Cola Company where he managed key leadership roles before founding Honasa Consumer Pvt. Ltd., the parent company of Mamaearth. He is known for the brand management expertise he brings to the table.

About Ghazal Alagh:

Ghazal Alagh is another Co-founder of Mamaearth, who is also known as the Chief Innovation Officer. Ghazal has completed her BCA in Information Technology student from Panjab University. She then served as a Corporate Trainer at NIIT and later on founded Dietexpert in February 2012 before founding Mamaearth under Honasa in 2016. Ghazal is also recognized as one of the top 10 women artists both domestically and internationally.

Mamaearth Ownership:

  • Varun Alagh – 34.30%

  • Sequoia Capital – 19.40%

  • Fireside Ventures – 10.30%

  • Stellaris – 9.50%

  • Sofina – 9.40%

  • Ghazal Alagh – 3.20%

  • Rishsbh Harsh Mariwala – 2.90%

  • Rohit Bansal – 0.77%

  • Kunal Bahl- 0.77%

  • Shilpa Shetty Kundra – 0.52%

  • Others – 8.60%

IPO Details:

The Company plans to raise funds through an offer of equity shares (face value Rs10 each) through the public issue. Mamaearth IPO comprises of fresh issue of equity shares aggregating up to ₹400 crores and offer for sale (OFS) of up to 46,819,635 equity shares by selling shareholders.

The OFS comprises – up to 3,186,300 equity shares by promoter Varun Alagh and up to 100,000 equity shares by promoter Ghazal Alagh along with Evolvence India Fund III Ltd, Fireside Ventures Investment Fund –I, Stellaris Venture Partners India I, among others.

The other selling shareholders include - Kunal Bahl, up to 477,300 equity shares by Rishabh Harsh Mariwala, up to 777,672 equity shares by Rohit Kumar Bansal, and up to 554,700 equity shares by actor Shilpa Shetty Kundra.

Moreover the company has claimed in its IPO prospectus that it is deriving benefits from economies of scale — as its gross profit margin improved over 3 percentage points from 66.5 percent in FY20 to 69.96 percent in FY22.

Mamaearth Financial Performance (Figures in Cr):

FY 2020

FY 2021

FY 2022

H1 FY 2023











Net Income





Margin (%)





Mamaearth Valuations:

Mamaearth is in talks to raise at least Rs 2,483 cr ($300 million) for the IPO scheduled for 2023. The company was last valued at Rs 9,935 cr ($1.2 billion) in January 2022 when it raised Rs 430 cr ($52 million) from investors, including US-based Sequoia and Belgium's Sofina.

Mamaearth is seeking a humongous and whooping valuation of around $3 billion – 10-12 times forward earnings based on sales growth and future revenue potential that too with Zero Manufacturing Units. The skincare startup is in early-stage discussions to raise nearly $300 million through its initial share sale, with the number pegged at $350 million.

Key objectives of raising funds :

  • Advertisement expenses towards enhancing the awareness and visibility of its brands amongst potential customers.

  • Capital expenditure for setting up new EBOs.

  • Investment in its Subsidiary, BBlunt for setting up new salons.

Few downsides besides its unwarranted valuation:

Growth is sluggish: As the company is getting bigger in terms of scale, its growth machine appears to be slowing down. While Mamaearth’s RFO rose 318 percent to Rs 460 crore in FY21, it registered a growth of 105 percent to Rs 943 crore in FY22.

Over-reliance on few products: The company’s IPO prospectus cautioned that the business has a significant dependence on the sale of its top 10 products. In fiscal years 2020, 2021, and 2022, and the six months ended September 2022, Mamaearth derived Rs 42 crore, Rs 140 crore, Rs 285 crore, and Rs 213 crore, or 38.40 percent, 30.38 percent, 30.17 percent and 29.45 percent of its revenue from operations, respectively, from the sales of its top 10 products.

Rising employee costs: Employee benefits expenses rose 3X in the past two fiscals — at Rs 79 crore in FY22, Rs 28 crore in FY21, and Rs 9 crore in FY20. The company has spent Rs 78 crore on employees in the first six months of FY23 which is almost the same amount paid in the entire FY22.

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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