Mamaearth IPO: Shilpa Shetty looks at 8x returns, Snapdeal co-founders 100x!
Honasa Consumer Ltd, the parent company of Mamaearth, has established a price range of Rs 308-324 per share for its forthcoming initial public offering, scheduled to commence on October 31. The IPO is expected to garner significant attention, with notable selling shareholders like Bollywood actor Shilpa Shetty Kundra positioned to secure substantial returns on their investments.
According to the company’s prospectus, Shilpa Shetty Kundra, a selling shareholder in the IPO, is expected to realize an impressive 8x return on her investment, given her average cost of acquisition at Rs 41.86 per share. Notably, she is offering approximately 1,393,200 shares as part of the offer-for-sale segment.
The substantial returns on Shilpa Shetty’s investment underscore the significant value appreciation within Honasa Consumer Ltd and its subsidiary, Mamaearth. This development also highlights the company’s remarkable growth trajectory and its ability to capitalize on the growing demand for natural and sustainable personal care and beauty products in the market.
With the IPO set to open at the end of October, investors and industry stakeholders are likely to closely monitor the market response to the offering, considering the notable participation of high-profile investors and the increasing investor interest in companies operating within the fast-growing personal care and wellness industry. This IPO is expected to provide valuable insights into market sentiment towards consumer-focused companies and their potential for sustained growth and profitability.
The notable returns anticipated by Snapdeal co-founders Kunal Bahl and Rohit Bansal, who initially invested in Honasa back in 2018, underscore the impressive growth trajectory and market success achieved by the company over the years.
With their acquisition of shares at an average price of Rs 3.21 apiece, the co-founders are expected to realize a remarkable return on their investment, surpassing 100x. This significant value appreciation reflects Honasa’s successful positioning within the personal care and wellness industry, highlighting the market’s positive response to its offerings and business strategy.
Furthermore, Marico’s Rishabh Harsh Mariwala, with an average cost of acquisition at Rs 6.05 per share, is also set to benefit from a considerable return on investment, estimated at 53x. This substantial return underlines the market’s recognition of Honasa’s strong market positioning and its ability to capitalize on the growing demand for natural and sustainable personal care products.
These substantial returns garnered by prominent investors, including industry leaders and entrepreneurs, not only underscore Honasa’s impressive market performance but also highlight the investor community’s confidence in the company’s growth prospects and its potential for sustained success.
As Honasa prepares for its initial public offering, these strong endorsements from experienced investors further contribute to the company’s market credibility and signify its potential for continued expansion and value creation within the personal care and wellness industry.
The upcoming initial public offering (IPO) of Honasa Consumer Ltd is structured to include a fresh issue of Rs 365 crore, along with an offer for sale of up to 41.25 million shares. At the upper price band of Rs 324 per share, the company is poised to raise approximately Rs 1,701.44 crore, leading to a valuation of approximately Rs 10,424.53 crore. This valuation underscores the substantial market interest and investor confidence in the company’s growth prospects and its position within the personal care and wellness industry.
In addition to the co-founders and notable industry figures, including Rishabh Harsh Mariwala, other prominent selling shareholders participating in the offer for sale (OFS) include Varun Alagh, Ghazal Alagh, Fireside Ventures Fund, Sofina, and Stellaris. The participation of these well-regarded investors and industry leaders in the OFS segment further underscores the robust market interest in Honasa’s IPO and signifies the company’s appeal among a diverse group of seasoned industry professionals and investment firms.
The opening of the anchor portion on October 30 and the subsequent closing of the IPO on November 2 mark significant milestones for Honasa as it moves towards its public listing. The IPO’s substantial size and the participation of prominent investors and industry stakeholders not only highlight the company’s strong market positioning and growth potential but also underscore the market’s enthusiasm for investing in businesses operating within the rapidly expanding consumer goods and wellness sector.
The negligible cost of acquisition for co-founders Varun Alagh and Ghazal Alagh, as indicated in the prospectus, reflects their role as the primary initiators and contributors to the establishment of Honasa Consumer Ltd and its subsidiary, Mamaearth. This detail emphasizes their significant involvement in the company’s growth journey, underscoring their strong alignment with the company’s vision and mission.
The significant returns expected for Fireside Ventures Fund and Stellaris, with a cost of acquisition at Rs 7.33, reflect the considerable value appreciation that these investment firms are poised to realize from their early investment in Honasa Consumer Ltd. At the upper end of the price band, these returns are estimated to be at 44.2x, demonstrating the success and market recognition of Honasa’s business model and growth trajectory.
The modest return on investment projected for Belgium-based Sofina fund, with an average cost of acquisition at Rs 112.07, indicates approximately 3x returns at the upper price band. While relatively lower compared to other investors, this return signifies the company’s ability to generate consistent value for its stakeholders and investors, showcasing its strong market performance and growth potential.
These returns reflect the collective success and value creation that Honasa has achieved over the years, highlighting its strong market presence and its ability to deliver sustainable growth and profitability within the highly competitive personal care and wellness industry. As the company prepares for its upcoming IPO, these notable returns further emphasize the market’s confidence in Honasa’s growth trajectory and its potential for continued success in the consumer goods and wellness sector.
Honasa Consumer’s impressive portfolio, encompassing renowned brands such as Mamaearth, The Derma Co, Aqualogica, Ayuga, and BBlunt, positions the company as a prominent player in the digital-first beauty and personal care (BPC) segment in India. The company’s significant revenue growth and market presence underscore its success in capturing consumer interest and engagement, highlighting its strong position within the competitive Indian beauty and personal care industry.
The notable compound annual growth rate (CAGR) of 80.14 percent in revenue from operations, recorded during the fiscal years 2021 to 2023, demonstrates Honasa Consumer’s robust business performance and its ability to achieve substantial revenue expansion within a relatively short time frame. This impressive growth trajectory is reflected in the company’s noteworthy revenue of Rs 1,492.75 crore in FY23, emphasizing its strong market positioning and its successful execution of strategic initiatives to drive revenue growth and market share expansion.
However, it is essential to note that despite its robust revenue performance, Honasa Consumer reported a net loss of Rs 142.8 crore during the fiscal year ending in March FY23. While the net loss may raise considerations regarding the company’s profitability and financial sustainability, it is crucial to assess the underlying factors influencing this outcome, including potential investments in business expansion, marketing initiatives, and research and development activities aimed at fostering long-term growth and market leadership.
Investors and industry stakeholders should closely evaluate Honasa Consumer’s financial performance and strategic initiatives to gain a comprehensive understanding of the company’s growth prospects, its approach to profitability, and its positioning within the rapidly evolving digital beauty and personal care market in India. This analysis will provide valuable insights into the company’s long-term viability and its ability to sustain its market leadership within the dynamic BPC industry landscape.
