Mamaearth Cofounder Ghazal Alagh Dismisses IPO Valuation Rumours

Ghazal Alagh, the cofounder of IPO-bound D2C startup Mamaearth, has denied the rumours associated with the startup, saying it has not subscribed to the valuation numbers.

The cofounder took to Twitter late on Wednesday (January 4) to address the alleged INR 24,000 Cr (around $3 Bn) valuation rumours the unicorn is seeking for its public listing.

“In our DRHP as is the standard practice there is no mention of valuation. Valuation discovery is a process which will take place over time as we get into deeper conversations with [the] investor community,” said Alagh as part of a Twitter thread talking about the IPO-bound unicorn.

“We have not quoted or subscribed to the valuation numbers which are getting mentioned in various posts on social media,” added the cofounder. 

Mamaerth’s parent company Honasa Consumer Limited filed its DRHP for IPO in the last week of December 2022. The company’s IPO will consist of a fresh issue of shares worth INR 400 Cr and an offer for sale of up to 46,819,635 equity shares, according to the startup’s draft prospectus.

Mamaearth’s last private valuation stood at $1.3 Bn. However, shortly after the unicorn filed the DRHP, several media reports cited a valuation figure of up to $3 Bn. This sparked an online debate around Mamaearth’s valuation and its balance sheet.

In the financial statements shared by Mamaearth in the DRHP, profit after tax for FY22 was corrected to INR 14.44 Cr. The D2C unicorn recorded a restated profit after tax of INR 3.67 Cr for the six months ended September 30, 2022. 

Different Similars From Elsewhere

Mamaearth is the first D2C brand in India to go for an IPO, though there have been many instances of D2C brands listing on the bourses globally. One such example is the US-based D2C brand The Honest Co, which offers infant care and fashion products.

Founded by Hollywood actress Jessica Alba, the startup went for an IPO in May 2021.

According to its draft registration statement filed with the Securities and Exchange Commission (SEC), the SEBI counterpart in the US, The Honest Co reported a loss of $14.5 Mn. The company reported a revenue of $301 Mn in 2020, with its gross margin reaching 35.9%.

Before the IPO, Honest faced backlash for seeking a very high valuation, seeing that the company was never profitable and was purely an online brand.

The company raised $412.8 Mn from its IPO, selling 25.8 Mn shares for $16 apiece. However, as of January 4, 2023, Honest’s shares closed at $3.02 apiece, having hit a low of $2.56 apiece on June 16, 2022.