Mamaearth: Honasa Consumer, incorporated in 2016, provides beauty and personal care products through its digital platform and currently serves over 500 cities in India.
- SUMMARY
- Mamaearth’s Rs 1,701-crore initial public offering (IPO) will begin on October 31.
- Price band set at Rs 308-324; IPO closes on November 2 Emkay Global has offered three valuation scenarios.
Brokerage firm Emkay Global Financial Services believes Honasa Consumer, It’s parent company, is well-positioned to capitalize on the rapidly rising beauty & personal care (BPC) market in the FMCG space with its ‘house of brands’ portfolio.
Emkay Global expects Honasa’s rapid scale-up and the promise of healthy continuous development with its portfolio of brands to keep it ahead of other listed FMCG peers. It believes that as the company grows in size, its profitability will improve.
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Honasa Consumer’s initial public offering (IPO) will go public on Tuesday, October 31 and will be available for subscription until Thursday, November 2. The business intends to raise around Rs 1,700 crore from primary markets by selling its shares at a set price range of Rs 308-324 per share.
According to Emkay, the post-issue estimated market valuation of Honasa Consumer is projected to be Rs 10,425 crore at the higher price range. Based on business valuations and predicted market capitalization, the stock seems appealing after listing under a scenario where the company expects to treble its turnover in the next three years.
Emkay stated that valuations will be reasonably valued in the event that the company achieves a 20% revenue CAGR with a 10% EBITDA margin. However, the local brokerage business believes It’s values are too high in a situation where revenue CAGR is 10% and EBITDA margin is 6%.
Honasa Consumer reported revenue of Rs 1,492.7 crore for the fiscal year 2023, with EBITDA of Rs 22.8 crore and EBITDA margins of 1.5 percent. Emkay has estimated Honasa’s revenue to be Rs 3,000 crore, Rs 2,580 crore, and Rs 2,000 crore, with EBITDA margins of 26%, 20%, and 10%, respectively.
“Honasa has a game plan in place for its recently incubated/acquired brands, which are growing at a faster rate.” It has accelerated its offline journey in order to reach a larger audience, obtain a competitive advantage, and drive scalability. With a gross margin of more than 70%, the company is trying to increase profitability by expanding up operations,” Emkay explained.
Honasa Consumer, founded in 2016, offers beauty and personal care items through its internet platform and currently covers over 500 cities in India. Investors in the domestic startup include Sequoia Capital India, Sofina SA, Fireside Ventures, and Shilpa Shetty Kundra.
According to Prashanth Tapse, Senior VP (Research) at Mehta Equities, It operates an asset-light business with strong growth potential, which has piqued the curiosity of the investor community. Due to significant advertising and capital investment, the company’s concentration on product development and innovation R&D may have an influence on short-term profitability.
“New investors should be cautious as the IPO includes fresh share issuance of Rs 365 crore and a low promoter stake,” said Mr. Singh. “Conservative investors may choose to wait and see, whereas risk-takers may consider long-term investments for potential growth.” However, in the current market conditions, the IPO appears to be overpriced.”
Frequently asked questions
When was Mamaearth’s IPO launched?
It’s parent Honasa Consumer IPO opens on October 31..
Which parent company of mamaearth IPO?
Honasa Consumer, the company behind It, has set a price range of Rs 308-324 per share for its IPO, which will take place on October 31.
Who invested in Mamaearth?
Among the selling shareholders in It’s IPO are well-known funds such as Evolvence India, Fireside Ventures, Sofina, and Stellaris, as well as well-known people such as Shilpa Shetty Kundra, who also serves as It’s brand ambassador.
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