Mamaearth parent Honasa Consumer has set the price band at ₹308-324 per share for its upcoming initial public offering (IPO), which will hit the Street on October 31, 2023. The three-day IPO will close on November 2, while allocation to anchor investors will take place on October 30.
The skincare company, co-founded by the husband-wife duo of Varun and Ghazal Alagh, is looking to raise about ₹1,701 crore at the upper end of the IPO price band, seeking a valuation of around ₹10,500 crore. The IPO of the fast-growing D2C (direct-to-consumer) beauty and personal care unicorn is a mix of a fresh issue of equity shares and an offer for sale (OFS) by existing shareholders.
The Gurugram-based company will raise ₹365 crore by issuing fresh equities and remaining ₹1,336 crore by OFS of 41,248,162 equity shares. The two promoters Varun Alagh and Ghazal Alagh, as well as existing shareholders Rohit Kumar Bansal and Sofina Ventures will offload their stake in the company. Among others, Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl will also pare their shares in the company.
The lot size is 46 equity shares and in multiples after that. So, the minimum investment amount for retail investors would be ₹14,904 and the maximum would be ₹193,752.
As per the document filed with capital market regulator, Honasa has reserved 10% of the issue for retail investors, up to 15% for non-institutional investors (NIIs), and up to 75% for qualified institutional buyers (QIBs). The company has also proposed to offer a 30% discount per equity share to eligible employees bidding in the IPO.
Honasa intends to use the capital raised through net proceeds from the fresh issue towards advertisement and capital expenses, investment in its subsidiary, and meet general corporate purposes. The company will invest ₹186 crore to meet advertisement expenses towards enhancing the awareness and visibility of its brands; ₹34.23 crore to incur capital expenditure for setting up new EBOs; and ₹27.52 crore for investment in its subsidiary, Bhabani Blunt Hairdressing for setting up new salons. A part of the fund will be also used to meet general corporate purposes and unidentified inorganic acquisition.
Honasa Consumer has added five new brands to its portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, and has built a ‘House of Brands’ architecture since launching Mamaearth in 2016. The company’s flagship brand, Mamaearth, is built to service a core customer need for safe-to-use, natural products, and focuses on developing toxin-free beauty products made with natural ingredients. As of September 30, 2022, Honasa Consumer portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics, and fragrances segments.
For the financial year ended March 2023, Honasa Consumer posted a loss of ₹151 crore against a profit of ₹14.4 crore in the last fiscal, dented by rising employee benefits and other expenses. However, operating revenue jumped 58% to ₹1,493 crore in FY23 compared to ₹943 crore in the previous year.
The total expenditure of D2C company surged 59.4% to ₹1,502 crore in FY23 from ₹942 crore in FY22, while the employee benefit cost more than doubled to ₹1,649 crore as compared to ₹788 crore in the last fiscal. The other expenses surged 50% to ₹8,584 crore.
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