Mamaearth Parent Honasa To Launch IPO On Oct 31 At INR 10,500 Cr Valuation

Honasa Consumer Limited (HCL), the parent company of the D2C beauty and personal care unicorn Mamaearth, is gearing up for its initial public offering (IPO) on October 31, 2023.

The company had submitted a Draft Red Herring Prospectus to the Securities and Exchange Board of India (“SEBI”) on December 28, 2022.

According to a Moneycontrol report, the anchor portion of the IPO is scheduled to open on October 30. Currently, there are no plans for a pre-IPO funding round.

It’s worth noting that HCL aims to raise approximately INR 1,700 Cr  through a combination of a fresh issue and an offer-for-sale, targeting an estimated valuation of around INR 10,500 Cr.

The IPO is being handled by investment banks, including Kotak Mahindra Capital, JM Financial, Citi, and JP Morgan, with legal advice provided by Cyril Amarchand Mangaldas, IndusLaw, and Khaitan & Co. The offering will consist of a fresh issue of shares valued at INR 400 Cr and an offer for sale of up to 46,819,635 equity shares, as outlined in the company’s draft prospectus.

Proceeds from the fresh issue will be directed toward bolstering marketing efforts to enhance brand visibility, establishing new exclusive brand outlets, and expanding the network of BBlunt salons.

According to the Draft Red Herring Prospectus (DRHP), shareholders looking to reduce their holdings include the Alaghs, Sofina Ventures SA, Evolvence, Fireside Ventures, Stellaris Venture Partners, Snapdeal founder Kunal Bahl, Bollywood actress Shilpa Shetty Kundra, Rishabh Harsh Mariwala, and Rohit Kumar Bansal. Notably, Sequoia Capital is not participating in the offer for sale.

Founded in 2016 by the husband-wife duo of Varun and Ghazal Alagh, HCL runs brands like Mamaearth, The Derma Co., Aqualogica, and Ayuga, and acquired stakes in BBlunt and Dr. Sheths.

Mamaearth, one of its brands, achieved a significant milestone by posting a net profit of INR 19.8 Cr in FY22, a stark improvement from the net loss of INR 1,332.2 Cr in FY21. This turnaround was attributed to increased customer repeat rates and the expansion of sales channels, both online and offline.

Mamaearth is on the brink of reaching INR 1,000 Cr in revenue. Its total income soared by 101% to INR 952.4 Cr in FY22 compared to INR 472.1 Cr in the previous fiscal year. The Tiger Global-backed startup’s revenue from operations also doubled, reaching INR 931.7 Cr from INR 459.9 Cr in FY21.

HCL achieved unicorn status following a fundraising round in December 2022, where it secured $52 Mn at a valuation of $1.2 Bn, led by VC firm Peak XV (previously Sequoia Capital).

HCL’s online distribution network covered over 18,000 pin codes in India as of September 2022, with products accessible in 700+ districts.

The ecommerce giant also sells products through more than 100,000 FMCG retail outlets in India. In the competitive beauty ecommerce landscape, it face competition from Nykaa, Purplle, SUGAR, Wow Skin Science, and others.

Honasa is actively pushing to expand its flagship brand, Mamaearth, into international markets with a strong growth agenda. The company is targeting key regions, such as Bangladesh, Malaysia, Vietnam, and Thailand, where it plans to boost Mamaearth’s presence by collaborating with local channels.

So far, Honasa has already established its presence in various international markets like the UAE, Qatar, Nepal, Malaysia, Maldives, and Mauritius, primarily through Amazon.

It’s important to note that the period between 2022 and 2023 has seen a slowdown in IPO activity due to ongoing market volatility. Additionally, Honasa is currently involved in multiple litigations. The DRHP reveals that the IPO-bound company and its various subsidiaries are engaged in four criminal and civil litigations against different individuals.

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