MUMBAI, 26 OCTOBER, 2023 (GPN): Honasa Consumer Limited IPO: Mamaearth Parent Company reveals the reason for reducing the issue size.

Mamaearth IPO:

Mamaearth parent Honasa Consumer has set the price band for its issue at Rs 308-324 per equity share of face value of Rs 10 each. Mamaearth IPO opens for subscription on Tuesday, October 31, and closes on Thursday, November 2. The allocation to anchor investors for Honasa Consumer IPO is scheduled to take place on Monday, October 30.

Mamaearth IPO Size

Mamaearth IPO consists of an offer for sale (OFS) of around 4.12 crore shares and a fresh share issuance of up to Rs 365 crore. The company expects to raise about Rs 1701.44 crore on the upper price band. As a result, the company was valued at Rs 10424.53 crore.

The IPO will see the sale of 3,186,300 shares by Honasa promoter Varun Alagh and up to 100,000 shares by his wife Ghazal Alagh. A number of other shareholders, including Kunal Bahl, Shilpa Shetty Kundra, Rishabh Harsh Mariwala, Fireside Ventures Fund, Sofina, Stellaris, and Rohit Kumar Bansal, will be selling their stakes in the OFS.

Mamaearth IPO analysis

As per draft red herring prospectus (DRHP), the IPO offer consisted of fresh issue of equity shares worth Rs 400 crore, and OFS of 4.68 crore equity shares by promoters, investors and other selling shareholders.

When GPN questioned about the offer’s reduction at today’s press conference, the company stated that they believed the OFS segment was less appealing to investors at this price. Of course, investors found it appealing to purchase, which is why the IPO’s size was lowered and that was the main factor behind it.

“As the management team believed that, at this point in time, roughly Rs 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 clarified.

The company intends to use the net proceeds to finance the following goals: advertising costs to raise the company’s brands’ exposure and awareness; The amount of capital that the company will need to build up new EBOs; Financial support for the establishment of new salons by the company’s subsidiary, Bhabani Blunt Hairdressing Private

Limited (BBlunt); general corporate objectives; and an unidentified inorganic acquisition.

Speaking about utilising issues proceeds, co-founder and promoter selling shareholder, Ghazal Alagh stated that they wish to concentrate on three areas. Expanding distribution is one, and Mamaearth is now the sole brand with an offline presence. The other brands have a fairly narrow focus. A significant portion of it will go there since they are merely testing the marketplace.Secondly, they are considering investing in discovering opportunities, brand incubation, or acquisition consideration. Thirdly, they are testing—or very carefully testing—new markets, such as international areas where they are already experiencing a lot of interest from incoming clients. However, they may be trying some sort of strategy on particular markets that we might want to try out.

Mamaearth IPO details

The book running lead managers of the Honasa Consumer IPO are Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, Jm Financial Limited, and J.P. Morgan India Private Limited. The registrar of the offering is Kfin Technologies Limited.

On Tuesday, November 7, the allocation for the Honasa Consumer IPO is anticipated to be completed. Honasa Consumer IPO is scheduled to list on the BSE and NSE, with a tentative listing date of Friday, November 10.

The company saw a turnaround in Q1-FY 2024, earning a net profit of Rs 24.71 crore compared to a net loss of Rs 151 crores in FY 2023 and Rs 11. 52 crores in Q1-FY 2023.

The gross profit margin of 17.03 % in Q1-FY 2024 allows a high profit poll to leverage as cost efficiency set in. The company is on the cusp of increase in profitability trajectory with business model efficiency and operating leverage setting in.

In terms of revenue from operation for the Financial Year 2023, Honasa Consumer Limited is the biggest digitally-first beauty and personal care (“BPC”) company in India, according to RedSeer Report.

In addition to adding five new brands—The Derma Co., Aqualogica, Ayuga, BBlunt, and Dr. Sheth’s—to its portfolio since launching Mamaearth in 2016, Honasa has also constructed a “House of Brands” architecture. Products in the baby care, face care, body care, hair care, colour cosmetics, and fragrances divisions are part of the company’s portfolio of brands with unique value propositions as of June 30, 2023. Through omni-channel distribution networks that span both online and offline touchpoints, the company provides its products to clients. By June 30, 2023, it will have contractual agreements for the sale of goods with a network of 31 retail chains that make up its modern trade channel.Ends

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Honasa Consumer Limited Rs 1701 crore IPO Opens on 31st October, Sets IPO Price Band at Rs 308-324 per share

Honasa Consumer Limited Rs 1701 crore IPO Opens on 31st October, Sets IPO Price Band at Rs 308-324 per share

Honasa Consumer Limited Rs 1701 crore IPO Opens on 31st October, Sets IPO Price Band at Rs 308-324 per share