MamaEarth IPO

According to the red herring prospectus (RHP) that Honasa Consumer Ltd. submitted to the Securities and Exchange Board of India (SEBI), the company is planning to start its initial public offering (IPO) on October 31. Honasa Consumer Ltd. is the parent company of D2C brands like Mamaearth, The Derma Co., and BBlunt. The capital markets regulator SEBI received Honasa Consumers' draft red herring prospectus in December 2022.

MamaEarth IPO

MamaEarth IPO Timeline

On October 30, the company will complete a pre-IPO placement; the public offering will close on November 2, 2023. In accordance with the RHP, MamaEarth offer for sell (OFS) 41.25 million more shares in addition to issuing new shares for Rs 365 crore. The fresh proceeds are less than the 400 crore rupees that were proposed in the company's DRHP (Draft Red Herring Prospectus) submitted in December of the previous year.

Shilpa Shetty Kundra, a brand ambassador and investor, as well as the founders of Snapdeal, Kunal Bahl and Rohit Bansal, will also take part in the OFS. Varun Alagh and Ghazal Alagh, co-founders of MamaEarth, will sell a percentage of their ownership in the company, while early investors Fireside Ventures, Stellaris Venture Partners, and Sofina will sell 7.97 million, 9.56 million, and 10.94 million shares, respectively, during the IPO. Varun and Ghazal Alagh, the company's co-founders, control about 37.35 percent of the company.

Financial Performance and shareholder breakdown

According to the RHP, Peak XV Partners (previously Sequoia Capital) will not participate in the OFS.  It's interesting to note that Evolvence India, which had previously expressed interest in taking part in OFS, has now withdrawn. Peak XV is the largest outside shareholder in the company with 19.38%, followed by Fireside and Stellaris with respective stakes of 10.38% and 9.45%.  The booked running lead managers will be Citigroup, JM Financials, Kotak Mahindra Bank, and JP Morgan, according to the RHP.

The operating revenue for Honasa increased by 58.3% to Rs 1,493 crore in FY23 from Rs. 943 crore in FY22 for the fiscal year that ends on March 31, 2023. Profits for the company dropped from Rs. 14 crore in FY22 to Rs. 4 crore in FY23, a 71.4% decrease.

It's important to note that when computing earnings, we have eliminated the unusual item of Rs. 154.6 crore for the impairment loss on goodwill and other intangible assets. If not, the company will incur a net loss of Rs. 151 crore. The business also released its Q1 FY24 quarterly results, recording operating revenue of Rs. 464.49 crore. 

Key Points

• On October 31, Honasa Consumer Ltd, the parent company of Mamaearth, will launch its initial public offering (IPO).
• On October 30, the issue's anchor book will be open for one day, and on November 2, the public offer will end.
• With effect from November 10, its equity shares will be listed on the BSE and NSE.