Mamaearth parent files for IPO; Shilpa Shetty, Kunal Bahl to sell partial stake, Sequoia not to sell in OFS

Mamaearth parent files for IPO; Shilpa Shetty, Kunal Bahl to sell partial stake, Sequoia not to sell in OFS

Mamaearth’s parent firm Honasa Consumer Ltd, co-founded by Shark Tank fame entrepreneur Ghazal Alagh, has filed DRHP for an IPO to raise up to about Rs 3,000 crore for existing selling shareholders and fresh issue, according to reports. Honasa Consumer is the owner and operator of personal care brands such as Mamaearth, BBlunt and The Derma Co. Honasa’s IPO will consist of a fresh issue of shares worth about Rs 400 crore, according to the DRHP filed with capital markets regulator SEBI. Existing investors and promoters will sell 46.8 million shares via Offer For Sale (OFS), which could fetch about Rs 2,500 crore, reports said.

Promoters and shareholders who will partially sell their holdings in Honasa Consumer include Alagh family, Sofina Ventures SA, Evolvence, Fireside Ventures, Stellaris Venture Partners, entrepreneur Kunal Bahl, and actor Shilpa Shetty Kundra. Founders Varun and Ghazal Alagh will sell a combined 3.2 million shares, totaling just over 6% of the OFS shares. The IPO proceeds will be used to fund a variety of objects, including advertisement expenses to enhance brand awareness and visibility, establishment of new exclusive brand outlets, investment in wholly-owned subsidiary BBlunt for setting up new salons and general corporate purposes.

Honasa Consumer is one of India’s largest digital-first beauty and personal care (BPC) brands. The company has six brands under its umbrella, including their flagship company, Mamaearth. Mamaearth has emerged as one of the fastest growing BPC brands in India. Honasa believes the market for BPC products will grow from approximately $17 billion in 2021 to approximately $30 billion in 2026 at a CAGR of approximately 12%, which is among the highest within the broader retail categories, they said in the DRHP filed with Sebi.

The company is largely dependent on sales from its top 10 products. In FY20, FY21, FY22 and the six months period ended September 30, 2022, Honasa Consumer derived Rs 421.58 million, Rs 1,397.26 million, Rs 2,846.38 million and Rs 2,128.53 million, or 38.40%, 30.38%, 30.17% and 29.45% of their revenue from operations, respectively, from the sales of their top 10 products. Further, sales of top two products, which are under the Mamaearth brand, resulted in the company netting between 12.41% to 14.42% during the time periods mentioned.