D2C Unicorn Mamaearth Makes Public Debut At Almost 2% Premium

D2C unicorn Mamaearth made its debut on the Indian stock exchange NSE with a nearly 2% premium. The shares were listed at INR 330, marking a listing gain of INR 6 over the issue price of INR 324.

On the BSE, Mamaearth shares listed flat at INR 324.

During the initial hours of trading, Mamaearth shares reached INR 337.60 per share but later settled at INR 331.45 on NSE. The company currently boasts a market capitalisation of $1.28 Bn.

Honasa Consumer Limited (HCL), the parent company of Mamaearth, allocated 2.36 Cr equity shares to anchor investors, raising INR 765.2 Cr as part of its initial public offering (IPO).

The IPO, however, had a lukewarm response on its first day, with a subscription rate of just 0.13X. BSE data shows that the issue received bids for 36.25 lakh shares out of the 2.88 Cr shares on offer. Notably, the portion reserved for employees was oversubscribed by 1.98X by the end of the day, with employees bidding for 67,344 shares against the 34,013 shares available.

On the final day of the public issue, the IPO was oversubscribed by a significant 7.61X due to strong interest from qualified institutional buyers (QIBs). It received bids for 22 crore shares compared to the 2.89 crore shares on offer.

Early-stage investors have profited handsomely from the listing. At the upper end of the listing price (INR 324), Snapdeal cofounders Rohit Bansal and Kunal Bahl are set to realise returns of almost 101X on their initial investment, while actor Shilpa Shetty is expected to see returns of 7.74X.

Among angel investors participating in Mamaearth’s OFS segment, the most significant winner appears to be Sharrp Ventures’ Rishabh Mariwala. He is projected to reap a windfall of INR 181.23 Cr at the peak listing price, resulting in a return of more than 53X on his initial investment of INR 6.05 per share. After the sale, he will still hold 34.2 lakh shares collectively valued at INR 110.81 Cr.

Speaking on the startup’s listing on the bourses today, Prashanth Tapse, senior VP research analyst at Mehta Equities, said, that the flat listing was in line with the brokerage’s expectation.

“…though risky investors feel the price is good for long-term as the business model has high potential of growth, we would continue to remain cautious on Mamaearth on the back of the loss-making nature of the business, high portion of OFS, high competition with margin pressure, low promoter stake, and weak financials which suggest a cautionary stand as historical listings with high valuations have often faced post-listing challenges,” Tapse added.

Mamaearth was founded by a husband-wife duo in 2016 and has since expanded to own multiple brands under the parent company, Honasa Consumer. The startup owns four beauty and personal care brands, including The Derma Co., Ayuga, Aqualogica, and Dr. Sheth’s.

Mamaearth has stated that the proceeds from the fresh issue will be used to strengthen marketing efforts, enhance brand visibility, establish new exclusive brand outlets, and expand the network of BBlunt salons.