Mamaearth parent Honasa plans to launch ₹1,700 cr IPO on Oct 31; eyes ₹10,500 cr valuation

Honasa Consumer, the parent company of popular brand ‘Mamaearth’, is reportedly planning to launch its highly initial public offering (IPO) on October 31. The fast-growing D2C (direct-to-consumer) beauty and personal care unicorn received approval for the listing from the markets regulator Securities and Exchange Board of India (SEBI) in August after filling draft papers in December 2022.

The company, co-founded by the husband-wife duo of Varun and Ghazal Alagh, is considering raising about ₹1,700 crore from the IPO, seeking a valuation of around ₹10,500 crore.

The public issue is expected to open between October 31 to November 2, while the anchor portion will open on October 30, according to a report by Moneycontrol. There will be no pre-IPO round as of now, the report noted.

As per the Draft Red Herring Prospectus (DRHP) filed with the SEBI, Honasa’s IPO is a mix of fresh issue of equity shares worth ₹400 crore and offer for sale (OFS) of up to 46,819,635 equity shares by promoters and existing shareholders. 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 OFS comprises up to 3,186,300 equity shares by Varun Alagh and up to 100,000 equity shares by Ghazal Alagh. Among existing shareholders, 777,672 equity shares will be offloaded by Kunal Bahl, 477,300 by Rishabh Harsh Mariwala, and 777,672 by Rohit Kumar Bansal.

Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited and J.P. Morgan India Private Limited are the book running lead managers to the issue.

As per the offer document, the primary objective of Honasa Consumer is to develop products that address beauty and personal care problems consumers face. It 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.

Honasa intends to use capital raised through net proceeds from 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.  

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.

According to a RedSeer report, the company had grown its revenue from operations at a CAGR of 193.15% between financial years 2020 and 2022, from ₹109.78 crore in the financial year 2020 to ₹943.46 crore in FY22. As of September 30, 2022, Mamaearth has emerged as the fastest growing BPC brand in India to reach an annual revenue of ₹1,000 crore billion (in the preceding 12 months) within six years of launch.

Honasa Consumer has an in-house innovation team of 45 members, as of September 30, 2022, that drives end-to-end ideation and execution of new product launches. The company sells its products through omni-channel distribution networks across online and offline touchpoints. It established scale across both online and offline channels and recorded the highest revenue from offline channels among digital-first BPC companies in India in FY22.