The highly-anticipated initial public offering (IPO) of Honasa Consumer Ltd, the parent of popular skincare brand Mamaearth, will open for subscription today. Ahead of the public offering, the country’s largest digital-first beauty and personal care company, co-founded by the husband-wife duo of Varun and Ghazal Alagh, raised ₹765.20 crore from anchor investors.
The Gurugram-based company has allotted 2.36 equity shares to 49 anchor investors at the upper price band of the IPO at ₹324 per equity share with face value of ₹10 per share, as per the exchange data. The issue saw participation from foreign as well as domestic investors, with foreign portfolio investors (FPIs) allocated nearly 54.7% of anchor allocation, and remaining to domestic investors.
Some of the marquee FPIs that received shares via anchor book included Capital Group, Fidelity International Ltd, Norges Bank, Abu Dhabi Investment Authority, First Sentier, White Oak, Franklin Templeton, Kotak, DSP, Carmigniac Gestion, Loomis Sayles, Matthews, Pictet, Hornbill, among others.
Out of the total anchor book, 33.14% were allocated to seven domestic mutual funds through a total of 19 schemes, while six prominent insurance companies were allocated 11.5% of anchor allocation. Domestic investors included prominent Mutual Funds like ICICI Prudential, Aditya Birla Sun Life, Nippon, Axis, Canara Robeco, Invesco and mutual fund of White Oak. They also included life insurance companies like SBI Life Insurance, ICICI Life Insurance, Birla Life Insurance, Max Life Insurance, Bajaj Allianz Life Insurance and Bharti AXA Life Insurance.
Here are key things to know about Mamaearth’s IPO before you subscribe:
IPO Dates
The issue of the skincare company will open for subscription today and close on November 2. The shares of the company are expected to list on the domestic stock exchanges BSE and NSE on November 10, 2023.
Price Band
The price band has been fixed at ₹308-324 per share, with a face value of ₹10 each.
Lot Size
Investors can apply for a minimum of 46 equity shares and in multiples of 46 shares thereafter. With this, the minimum application amount for retail investors is ₹14,904 per lot (46 shares), and the maximum is ₹1,93,752 for 13 lots (598 shares).
Issue Size
The FMCG company 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. It will raise ₹365 crore by issuing fresh equities and remaining ₹1,336 crore by offer for sale (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.
Objective of 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. Of the ₹365 crore raised from fresh issue, it proposes to 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.
IPO reservation
As per document filed with SEBI, 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.
Financial Performance
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.
Promoters
Honasa is founded and promoted by husband-wife duo of Varun Alagh and Ghazal Alagh. Varun Alagh is Chairman & CEO of the company and Ghazal Alagh is the CIO. The company has other investors like Fireside Ventures Fund, Sofina, Stellaris, Rohit Kumar Bansal, Rishabh Harsh Mariwala and Bollywood celebrities such as Shilpa Shetty Kundra and Kunal Bahl.
About Honasa Consumer
Founded in 2016, Honasa Consumer is the largest digital-first beauty and personal care (BPC) company in India in terms of revenue from operations for the financial year 2023, as per RedSeer report. Since launching flagship toxin-free skincare brand Mamaearth in 2016, Honasa 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. 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.
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