IPO Alert: Mamaearth is soon going to launch its IPO

The reported valuation for the Mamaearth IPO is at Rs 24,000 crore which is almost 25x FY22 revenues and 1600 x FY22 profits.

IPO mamaearth

Angel investors, including Bollywood actress Shilpa Shetty, stand to make a killing in the forthcoming IPO of Mamaearth as the company is being valued at Rs 24,000 crore.

Honasa Consumer Ltd, the owner of the popular beauty and personal care brand, is planning to launch Mamaearth’s IPO. It filed the Draft Red Herring Prospectus (DRHP) for its IPO on December 30, 2022, with SEBI.

Sources said keeping aside the unrealistic high revenue multiple valuations of the Mamaearth IPO, angel investors are going to multiply their investment with this IPO. The IPO will consist of a fresh issue of shares worth Rs 400 crores and an OFS of up to 46,819,635 shares.

“The reported valuation for the Mamaearth IPO is at Rs 24,000 crore which is almost 25x FY22 revenues and 1600 x FY22 profits (PE). These are incredibly premium valuations compared to established brands like Marico or Dabur that trade between 50x to 60x PE with legacy brands and deep offline distribution,” a source said.

Sources said investors have already burnt their fingers in IPOs like PayTm, Nykaa, Zomato and assorted smaller issuances.

Angel investor Devansh Lakhani, Director and Startup Fundraising Expert of Lakhani Financial Service has provided a blow-by-blow account of Mamaearth`s lukewarm profit run in a LinkedIn post, Indian Retailer reported.

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“In FY23, H1 the company made a sale of Rs 684 crore with a marketing spend of Rs 272 crore. This gives them an ROI of 2.5 which isn`t that alluring. The company recorded a restated cumulative profit after tax (PAT) of Rs 3.67 crore in the first and second quarters of FY23, according to filings filed with the SEBI. I doubt that investors would be interested in investing in a company that is worth 1,000 times its profit,” Lakhani stated.

Headquartered in Gurugram, Mamaearth was founded in September 2016 by Ghazal Alagh and Varun Alagh, to make skincare routines a little stylish but with maximum care.

Backed by Shilpa Shetty, this brand is distinguished in the cosmetics industry of India as an online platform that offers natural and toxin-free skin care products.