Honasa Consumer, parent company of Mamaearth, set to launch IPO on October 31

One of India’s fastest-growing startups, Mamaearth’s parent company, Honasa Consumer Ltd., will launch its initial public offering (IPO) on October 31, 2023. The anchor book would be open on October 30 and will last the whole day, while the offer to the public will close on November 2, 2023, as per the firm's red herring prospectus filed with the Securities and Exchange Board of India (SEBI).

The firm will be offering new shares worth Rs. 365 crore along with an offer for sale (OFS) of 41.25 million shares. These numbers are slightly lower than what was previously decided: fresh shares worth Rs. 400 crore and an OFS of 46.82 million shares. Mamaearth’s parent company, Honasa Consumers, filed its red herring prospectus draft with SEBI in December 2022 and then received regulatory approvals in August 2023.

As per the IPO schedule, the listing of its equity shares will be held on the BSE and NSE as of November 10, 2023.

Honasa Consumer was co-founded in 2016 by the duo of Varun and Ghazal Alagh. The company received its unicorn status in January 2022. It had previously been raised by Peak XV Partners, formerly known as Sequoia Capital, at a valuation of $1.2 billion.

Fireside Ventures, Stellaris Venture Partners, and Sofina Ventures, along with high-net-worth individuals Kunal Bahl, Rishab Mariwala, Rohit Bansal, and Shilpa Shetty, are planning to divest a portion of their shares as part of the upcoming IPO. The direct-to-consumer (DTC) company, specializing in the production of beauty, baby care, and skincare products, has allocated shares valued at Rs 1 crore for its employees.

Currently, Varun and Ghazal Alagh own 43.54%, while Peak XV Partner owns 20.94%, followed by Fireside Ventures and Stellaris - 15.01 per cent and 11.24 per cent, respectively.

Peak XV Partners will refrain from participating in the Offer for Sale (OFS). In March 2023, Honasa's CEO, Varun Alagh, informed us that their primary investor, Peak XV Partners, would retain their entire shareholding without any divestment in the IPO, resulting in the founders maintaining ownership of over 97 percent of their shares post-IPO.

The investment banks managing the IPO include Kotak Mahindra Capital, JM Financial, Citi, and JP Morgan, while legal advisory services are provided by Cyril Amarchand Mangaldas, IndusLaw, and Khaitan & Company. KFin Technologies serves as the registrar for this significant offering.

During Q1 FY24, Honasa Consumer reported revenue from operations amounting to Rs. 464.49 crore, marking a 49% increase compared to the corresponding period in the previous year. Over the three-month span, the company, known for its brands such as Aqualogica, Ayuga, BBlunt, The Derma Co., and Mamaearth, posted a net profit of Rs. 9.24 crore, a notable shift from the Rs. 2.51 crore loss recorded in the same period the previous year.

However, in FY23, the Omni-Channel Retail Company reported a net loss of Rs. 150.97 crore, in contrast to the net profit of Rs. 14.44 crore in FY22. On a positive note, the operating revenue witnessed a significant 58 percent year-on-year growth, reaching Rs. 1,492.75 crore. Additionally, the EBITDA showed substantial improvement, surging nearly 98 percent year-on-year to Rs. 22.8 crore, accompanied by a 30 bps margin expansion, totaling 1.52 percent for the fiscal year FY23.