Honasa Consumer Ltd., the parent of Mamaearth, launched its initial public offering on Oct. 31. The IPO issue will close on Nov. 2.
The beauty and personal care company's IPO comprises a fresh issue of equity shares worth Rs 365 crore. The company also has an offer for sale of 4.12 crore shares by promoters, investors, and other selling shareholders.
The company intends use the proceeds largely towards advertising expenses to enhance brand visibility. It also plans to deploy funds for capital expenditure to set up new exclusive brand outlets and investing in it's subsidiary, BBlunt, to set up new salons.
IPO Details
Issue Opens: Oct. 31
Issue Closes: Nov 2
Fresh Issue Size: Rs 365 crore
Shares for Offer For Sale: 4.12 crore shares
Total Issue Size: Rs 1,701 crore
Price Band: Rs 308–324 per share
Lot Size: 46 Shares
Face Value: Rs 10 per share
Listing: BSE and NSE
The company has not undertaken any pre-IPO placement.
At the upper price band, the company has an implied market cap of Rs 10,424 crore.
Business
Honasa Consumer is a digital-first beauty and personal care company. The company's flagship brand is Mamaearth, which focuses on developing toxin-free beauty products.
Since Mamaearth's launch in 2016, the company has added five new brands to its portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth's.
The portfolio of brands has differentiated value propositions, including products in the baby care, face care, body care, hair care, colour cosmetics, and fragrances segments.
According to the RedSeer Report, the company has a market share of 5.4% (Rs 1,330 crores) of the online BPC market in terms of gross merchandise value.
Use Of Proceeds
Advertisement expenses: Rs 182 crore.
Capital expenditure for setting up exclusive brand outlets: Rs 20.6 crore.
Investment in subsidiary, BBlunt: Rs 26 crore
Risk Factors
The company recorded losses in fiscal 2021 and 2023. Its loss was Rs 11.53 crore in Q1 FY23.
The company outsources the manufacturing of all their products to third-party manufacturers under non-exclusive contract manufacturing arrangements and does not own any manufacturing facilities.
The top three manufacturers contributed 46% of the total value of purchased goods for Q1 FY23.
The top 10 products contributed to 29.10% of the revenue from operations in Q1 FY23.
A substantial portion of revenue comes from a single brand, Mamaearth. It contributed to 67% of the overall revenue in Q1 FY23.
The company has incurred significant advertisement expenses and spent 35% of their revenue from operations towards this in Q1 FY23.
The competition in the beauty and personal care industries is intense.
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