The Honasa Consumer, the parent company of the popular personal care brand Mamaearth, is set to launch its initial public offering (IPO) for subscription. The subscription period will be from October 31 to November 2, and the shares will be available within a price range of INR 308 to INR 324 per share. At the top end of this price range, the company has set a target to raise INR 1,701 crore from the market, which would value the company at INR 10,425 crore.
The IPO comprises a fresh issuance of shares valued at up to INR 365 crore and an offer for sale (OFS) of approximately 4.12 crore shares.
In the IPO, Honasa promoter Varun Alagh will offer 3,186,300 shares for sale, and his wife, Ghazal Alagh, will sell a maximum of 100,000 shares. The pre-IPO shareholding structure indicates that the promoters collectively hold a 37.41% stake in the company.
Mamaearth Shareholders:
Additional shareholders participating in the Offer for Sale (OFS) will consist of Kunal Bahl, Shilpa Shetty Kundra, Rishabh Harsh Mariwala, Fireside Ventures Fund, Sofina, Stellaris, and Rohit Kumar Bansal, all divesting their stakes.
The bid lot size is set at 46 shares per lot, meaning that the minimum bid lot value in the retail category would be INR 14,904. A portion of the issue, approximately 10%, is earmarked for retail investors, 15% is allocated to High Net Worth Individuals (HNIs), and the remaining 75% is designated for qualified institutional buyers (QIB).
Honasa employees will enjoy a discount of INR 30 per share, and they will also have a reserved allocation of equity shares valued at up to INR 10 crore.
The stock is scheduled to be listed on both NSE and BSE on November 10, with the basis of allotment expected to be finalized by November 7.
The IPO’s book-running lead managers comprise Kotak Mahindra Capital, Citigroup, JM Financial, and JP Morgan.
The net proceeds from the IPO will be allocated for various purposes, including boosting brand visibility through advertising expenses, funding capital expenditure for establishing new Exclusive Brand Outlets (EBOs), expanding the network of salons operated by its subsidiary, Bhabani Blunt Hairdressing, covering general corporate needs, and potential inorganic acquisitions not yet identified.
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For the quarter ending in June, the company’s revenue from operations reached INR 464.49 crore, marking a 49% increase from the previous year. According to official filings, the net profit amounted to INR 9.24 crore. In the corresponding quarter of the previous year, the company had incurred a loss of INR 2.51 crore.
The company has credited the year-on-year surge in quarterly operating revenue to increased sales of its flagship Mamaearth brand, which constituted the majority of its total revenue.
Mamaearth Losses:
“Under the Mamaearth brand, we had higher sales of products across the face care, hair care, body care, baby care and colour care categories,” the company said.
During FY23, Honasa recorded a net loss of INR 150.97 crore, whereas in the preceding year, it had posted a net profit of INR 14.44 crore. Nevertheless, its operating revenue witnessed a substantial year-on-year growth of 58%, reaching INR 1,492.75 crore.
The consumer company generates a significant portion of its operational revenue through the sale of products under the prominent Mamaearth brand. It mentioned that any decline in the demand for Mamaearth branded products could potentially have a detrimental impact on our business, cash flow, and financial performance.