Honasa Consumer IPO | Mamaearth IPO Review

Honansa Consumer IPO is looking to raise Rs 1,701 crore via IPO route, which consists of a fresh issue size of Rs 365 crore and offer-for-sale (OFS) of up to 4.12 crore equity shares by its promoters and other selling shareholders. Honasa Consumer Limited (Mamaearth) provides beauty and personal care products through its digital platform.

IPO opensOct 31, 2023
IPO ClosesNov 2, 2023
IPO Size (Rs.)₹1,701.00 Cr
IPO Size (shares)53,098,811 shares
BreakupFresh issue of ₹365.00 Cr + Rest OFS
Face Value:₹ 10/-
IPO Price in Rs :₹308 to ₹324
Minimum Lot46 Shares
Listing AtNSE , BSE
Anchor & QIB Quota75%
NII Quota15%
Retail Quota10%
 Lead ManagerKotak Mahindra Capital, Citigroup Global, JM Financial, J.P.Morgan India
RegistrarKfin Technologies

About Honasa Consumer Limited (Mamaearth):

  • Honasa Consumer Limited was incorporated on September 16, 2016.
  • The company was founded in 2016 by the husband-wife duo Varun and Ghazal Alagh.
  • Company began with the launch of Mamaearth and over the years added five more brands to its portfolio.
  • Primary objective of company is developing products that address beauty and personal care problems faced by consumers.
  • Their flagship brand, Mamaearth, is built to service a core customer need for safe-to-use, natural products, and focuses on developing toxin-free beauty products made with natural ingredients. As of FY2023, Mamaearth has emerged as the fastest growing BPC brand in India to reach an annual revenue of ₹1,000 crore (in the preceding 12 months) within 6 years of launch.
  • After launching Mamaearth in 2016, Honasa has added 5 new brands to their portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, and have built a ‘House of Brands’ architecture. As of June, 2023, their portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
  • Honasa acquired BBlunt Salons along with the BBlunt product business in March 2022. Through BBlunt Salons, they offer hair care, grooming and styling services for women and men across 10 leased outlets in Mumbai, Bangalore and Kolkata.
  • As of June 30, 2023, company’s brand agnostic, integrated supply chain comprises of 13 warehouses spread across 7 districts in India. Of these 13 warehouses, 3 warehouses are directly managed by them.

Financials: Honasa Consumer Limited (Mamaearth)

Particulars / Rs. In crore2023(03)2022(03)2023(12)2022(12)2021(12)
Revenue from Operations464.49312.251,492.75943.47459.99
Revenue Growth (%)48.76%58.22%105.11%
Adj EBITDA34.99-5.6150.9130.2531.36
Adj EBITDA Margin (%)7.53%-1.80%3.41%3.21%6.82%
Profit before Tax33.95-14.03-141.0422.44-1,324.61
Net Profit24.72-11.53-150.9714.44-1,332.22
Share Capital136.34136.05136.340.010.01
Net Worth638.26700.97605.9705.62-1,765.14
EPS – Diluted (₹)0.83-0.3-4.660.53-98.35
RONW (%)4.07%-1.33%-23.57%2.23%NA
Net Asset Value- Basic (₹)20.2922.3119.2723.42NA
Post issue Share Capital321.74
IPO price324.0
EPS Fy23-4.7
PE Fy23-69.0
EPS Fy24 (annualized)3.1
PE Fy24  (annualized)105.4
Market cap in Lacs10,424.4
Market Cap/sales7.0

Anchor: Honasa Consumer Limited (Mamaearth) IPO

Honasa Consumer Ltd, allotted 2.36 crore equity shares to 49 anchor investors and raised ₹765.20 crore ahead of the company’s IPO.  FPIs were allocated nearly 54.7% of anchor allocation, and remaining to domestic investors. Prominet FPI’s include participating FPIs are Capital Group, Fidelity International Ltd, Norges Bank, Abu Dhabi Investment Authority, First Sentier White Oak, Carmigniac Gestion, Loomis Sayles, Matthews, Pictet and Hornbill. Domestic investors included MFs such as ICICI Prudential, Aditya Birla Sun Life, Nippon, Axis, Canara Robeco, Invesco and Life Insurance companies such as SBI Life Insurance, ICICI Life Insurance, Birla Life Insurance, Max Life Insurance, Bajaj Allianz Life Insurance and Bharti AXA Life Insurance.

Honasa Consumer Limited (Mamaearth) IPO: Salient Points

  • The promoters hold 37.41% of the company, which will get diluted post the IPO to 35.34%.
  • Those offering shares as part of OFS include promoters Varun Alagh and Ghazal Alagh, investors like Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, Rishabh Harsh Mariwala and Shilpa Shetty Kundra.
  • In January 2022, the company entered the unicorn club.
  • Company is the largest digital-first beauty and personal care company in India in terms of revenue from operations for the Financial Year 2023.
  • the flagship brand, Mamaearth, by end of the FY2023, had become the fastest-growing BPC (beauty and personal care) brand in India, achieving an annual revenue of ₹1,000 crore within six years of its launch.
  • 42% of their total expenses in Fy23 went for advertising. This is disproportionately high.
  • about half of Mama Earth’s products are sold through Amazon and Flipkart, while rest are sold through their own website.
  • it has total dependency on third parties for manufacturing and good amount for sales.
  • The company is coming at an extremely high valuation.
  • Mamaearth’s client retention is quite low.
  • it follows a asset-Light Business Model.
  • Honasa has achieved impressive growth in revenue from operations, with a Compound Annual Growth Rate (CAGR) of 80% between Financial Years 2021-2023,
  • The company gives priority to volume growth through aggressive advertisement.
  • Honasa Consumer Limited (Mamaearth) IPO is coming at a PE ratio of 105x (FY24 annualized on Q1FY24 results). its market cap / sales ratio is about 7.
  • Anchor response has been good.
  • I am not positive on Mamaearth IPO. If I decide to apply at last minute, it will be purely for short term knowing that it can go either way. However if it can sustain its growth rate, it can ring in profits in medium to long run.
  • GMP as reported on social media is in single digit.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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