The Mamaearth IPO, valued at Rs 1,701.44 crores, is a book-built issue comprising a fresh issue of 1.13 crore shares worth Rs 365.00 crores and an offer for sale of 4.12 crore shares amounting to Rs 1,336.40 crores.

Bidding for the Mamaearth IPO commenced on October 31, 2023, and concluded on November 2, 2023. The allotment process was finalized on Monday, November 6, 2023, with the shares being listed on both the BSE and NSE on November 7, 2023.

The price band for the Mamaearth IPO was set at ₹308 to ₹324 per share, with a minimum lot size of 46 shares. Retail investors were required to invest a minimum of ₹14,904. The minimum lot size investments for sNII and bNII were 14 lots (644 shares), amounting to ₹208,656, and 68 lots (3,128 shares), amounting to ₹1,013,472, respectively.

Additionally, the issue included a reservation of up to 34,013 shares for employees, offered at a discount of Rs 30 to the issue price.

Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited, and J.P. Morgan India Private Limited acted as the book running lead managers for the Mamaearth IPO, with Kfin Technologies Limited serving as the registrar for the issue.

Objective of IPO.

Out of INR 1701 Cr.,

rest INR 1336 Cr. is “Offer for sale.”

Utilization of INR 365 Cr. is Fresh Issue:

The company intends to continue to invest in marketing, which will lead to higher brand recall and acquisition of new customers for existing brands as well as any new brands that it may launch in the future.

The company follows a consumer centric and data-led contextualized approach to marketing, and continuous two-way engagement with consumers as an integral part of business model.

1. Advertisement expenses towards enhancing the awareness and visibility of our brands.
2. Capital expenditure to be incurred by our Company for setting up new EBOs.
3. Investment in our Subsidiary, Bhabani Blunt Hairdressing Private Limited (“BBlunt”) for setting up new salons.
4. General corporate purposes and unidentified inorganic acquisition.

Read more

About Honasa Consumer Ltd. Limited

The company is the largest digital-first beauty and personal care (“BPC”) company in India in terms of revenue. It worked with the primary objective of developing products that address beauty and personal care problems faced by consumers.

The company has a portfolio of brands. The flagship brand, Mamaearth (Launched in 2016), 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.

Brand Portfolio:

1. Mamaearth
2. The Derma Co.
3. Aqualogica
4. Ayuga
5. BBlunt
6. Dr. Sheth’s

 As of June 30, 2023, portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.

The BPC products market in India is undergoing a fundamental re-industrialization owing to the convergence of technology, demographic dividend, and growing consumer aspirations. The market for BPC products in India is expected to grow from $20 billion in 2022 to app. $33 billion in 2027 at a CAGR of app. 11%, which is among the highest within retail categories and other retail categories.

India’s per capita spend on BPC products is currently one of the lowest in comparison to some of the other developing countries and is at the cusp of growth as GDP per capita has surpassed $2,000, which is a critical inflection point as observed in other developing economies. There are several consumer behavior changes that are shaping the Indian BPC market. With increasing incomes and awareness, consumers are increasingly looking for masstige brands.

BPC is one of those categories that lends itself well to digital penetration. The online BPC market, which is currently sized as US$3 billion, is expected to grow at 29% annually to be around US$11 billion by 2027, translating to an online penetration of 34%.

Risk Analysis.

1. Rapidly changing consumer preferences and spending patterns, changing beauty and personal care trends. This creates a lot of competition in the market. The market share of the company as of CY22 is 1.5% of the total BPC market. This makes the company offer discounts to the consumers.
2. The top 10 products hold approximately 30% of the total Revenue. Similarly, Mamaearth holds approximately 80% - 90% of sales. Talking about expenses, Advertising holds 40% of revenue, whereas Cost of goods sold accounts for approximately 30%.
3. The company relies on relationships with certain marketplaces and web traffic drivers for sales through our online channel.
4. Unsuccessful launch of new products can hamper the brand image of the company.
5. The company does not manufacture products and relies entirely on third-party manufacturers for the manufacturing. The top three manufacturers contributed 70-80% of the total value of purchase of traded goods.
6. The company is dependent on several third-party service providers to sell or distribute products to consumers, and on third party technology providers for certain aspects of operations.
7. The company do not hold any patents over product formulae and have not made any applications in this respect.
8. Locations of EBOs and Saloons can lead to cost or can help in increasing the revenue depending on the management’s decision.
9. Warehousing services are done on land which is on Lease.
10. The company requires certain approvals and licenses in the ordinary course of business.