7 years old. ₹1,500 crores in revenues. A bottom line in the black. And on the verge of a massive IPO. That’s the Mamaearth story.
Or rather, that’s the story of Honasa Consumer Ltd. See, Mamaearth is just a brand. The company is named Honasa Consumer and it’s building a “House of Brands” ecosystem to capture India’s burgeoning Beauty and Personal Care (BPC) industry. For Honasa, there’s Derma and Dr Sheth’s which they say is the kind of skincare product that will be prescribed by dermatologists. They have Aqualogica. They have Ayuga for the ones who prefer Ayurveda. And of course, the flagship Mamaearth Brand.
But can Honasa Consumer take on the might of incumbent rivals like HUL who don’t want to cede ground in the BPC industry? What’s Honasa’s strength that could help it scale newer heights? And is the IPO pricing really attractive for retail investors?
You can read this story by Finshots to learn more about Honasa Consumer (Mamaearth) and its IPO here.
More information about the company
India’s retail industry is huge and expanding quickly; it is predicted to reach a value of over US$1.4 trillion by 2026. This growth is particularly noticeable in the beauty and personal care (BPC) sector, where around half of the market is anticipated to be organized by that time. Being a large, rapidly expanding BPC company that prioritizes digitalization, Honasa is in a unique position. It is positioned uniquely as a large, rapidly expanding BPC house of brands that prioritizes digital media.
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.
As of September 30, 2022, Mamaearth had become the fastest-growing Beauty and Personal Care (BPC) brand in India, achieving an annual revenue of ₹10 billion in the preceding 12 months, within six years of its launch. Since introducing Mamaearth in 2016, Honasa has expanded its portfolio with five new house of brands: The Derma Co., Aqualogica, Ayuga, BBlunt, and Dr. Sheth’s. As of September 30, 2022, their range of brands offers various products in baby care, face care, body care, hair care, and color cosmetics and fragrance segments.
Mamaearth is the largest brand in the DTC BPC market in India in terms of revenue generated from the DTC channel in the Financial Year 2022.
They have a market share of 5.3% in the online BPC market.
Mamaearth was India’s most-searched BPC brand on Google Trends between January 2020 and November 2022.
Mamaearth was ranked among the top three in terms of awareness in the grooming category on Flipkart between May 2021 and November 2022.
They were ranked second amongst digital-first BPC companies in India in terms of gross profit margins in the financial year 2021.
What is the issue size of the Honasa Consumers IPO?
The entire public offer of the company is an offer for sale (OFS) of up to 4.12 crore equity shares by the selling shareholders and a fresh issue of equity shares aggregating up to Rs 365 crores.
Financials of Honasa Consumers (₹ crores)
| As at and for the period ended | Total assets of subsidiaries | Total revenue of subsidiaries | Net cash flow of subsidiaries |
|---|---|---|---|
| March 31, 2022 | 67.515 | 11.909 | (1.165) |
| September 30, 2022 | 96.385 | 45.117 | 4.217 |
Revenue break-up (₹ crores)
| Particulars | As of March 31, 2022 | As of March 31, 2021 | As of March 31, 2020 |
|---|---|---|---|
| Revenue growth | 105.11% | 319.00% | NA |
| Gross Profit | 660.026 | 327.284 | 73.007 |
| EBITDA | 11.459 | (1334.033) | (431.714) |
Risk factors to consider:
- They derive a significant amount of revenue from a limited number of products. Any decrease in the sales of key products will adversely affect the business, cash flows, financial condition, and results of operations.
- Reliance on celebrities and social media influencers as part of their marketing strategy may adversely affect the business and demand for services.
- The inability to effectively manage or expand their offline sales network may have an adverse effect on the business, results of operations, cash flows and financial condition.
- They rely on relationships with certain marketplaces and web traffic drivers for sales through online channels. Any interruptions or delays in service on their websites or mobile applications, or any undetected errors or design faults, could result in limited capacity, reduced demand, processing delays, and loss of consumers, suppliers, or sellers.
- They are dependent on several third-party service providers to sell or distribute their products to consumers and on third-party technology providers for certain aspects of their operations. Any disruptions or inefficiencies in these operations may adversely affect their business, financial condition, cash flows, and results of operations.
- They’ve experienced negative cash flows from operating, investing, and financing activities in the past. They have recorded losses in the past. And any losses in the future may also adversely impact the business and the value of the equity shares and may require additional financing in the form of debt or equity to meet the business requirements.
- There is outstanding litigation pending against them and their subsidiaries, which, if determined adversely, could affect the business, results of operations, cash flows, and financial condition.
Schedule of Honasa Consumer Limited IPO
| Issue Period | 31st October to 2nd November 2023 |
|---|---|
| Price band | ₹ 308 - 324 |
| Minimum Bid quantity | 46 & Multiples thereof |
| Deadline for accepting UPI mandate | Until 5 PM on the issue closing day |
| Finalization of Allotment | 7th November 2023 |
| Initiation of Refunds | 8th November 2023 |
| Credit of Shares | 9th November 2023 |
| Date of Listing | 10th November 2023 |
| Mandate end date | 17th November 2023 |
| Anchor Investors Lock-In End Date | 2nd December 2023 |
How to apply to the Honasa Consumer Limited IPO?
You can apply for the Honasa Consumer Limited IPO using any supported UPI app by following two steps:
- Enter your bid on Kite
- Accept the UPI mandate on your phone
On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.
How to check the allotment status for Honasa Consumer Limited IPO?
You can check the allotment status for the Honasa Consumer Limited IPO on the website of the Registrar and Transfer agent. Alternatively, you can also check the allotment status on the NSE website.
And, no we didn’t forget about valuations at all.
