Honasa Consumer Ltd, the parent company of the personal care brand Mamaearth, has filed its draft red herring prospectus for an initial public offering (IPO)with the Securities and Exchange Board of India (SEBI).
The offer will include a new issuance of shares worth Rs 400 crore, as well as an offer-for-sale (OFS) component for 46.82 million shares.
If it goes through, Honasa Consumer will be among the first new-age direct-to-consumer companies to go public in India, following the withdrawal of audio tech brand Boat’s public offering plans earlier this year, citing choppy market conditions.
The OFS will see Snapdeal founders Kunal Bahl and Rohit Bansal, as well as investors such as Sofia, Fireside Ventures, Evolvence India, Stellaris, and angel investors such as Rishabh Mariwala of FMCG giant Marico and actor Shilpa Shelty Kundra, part-sell their stakes in the firm.
The Gurugram-based firm, which also operates The Derma Co and BBlunt in addition to Mamaearth, was valued at USD 1.2 billion when it last raised USD 52 million in January of this year. Sequoia Capital led Mamaearth’s January funding round, but it is not selling its shares in the proposed IPO.
The issue’s bankers are Kotak Mahindra Capital Company, Citigroup Global Markets India, JM Financial, and JP Morgan India.
According to the offer document, Honasa Consumer reported revenue from operations of Rs 722.73 crore with a profit of Rs 3.67 crore from April to September 2022. This compares to Rs 943.46 crore in operating income for the fiscal year that ended March 31, 2022, with a profit of Rs 14.43 crore.
Honasa is the second new-age firm to aim for a profitable listing, following Nykaa. Since their initial public offering last year, startups such as Paytm, Policybazaar, Zomato, and others have faced questions from public market investors about their profitability plans.
Honasa Consumer stated in its offer document that it intends to use the IPO proceeds for advertising expenses, capital expenditure in establishing new exclusive brand outlets (EBOs), investment in its subsidiary BBlunt to open new salons, general corporate purposes, and unidentified inorganic acquisitions.
“We intend to use Rs 186 crore of the net proceeds for marketing initiatives during fiscal years 2024, 2025, and 2026, including through offline and online media service agreements with entities with which we do business regularly as well as any new vendors or agencies that are deemed necessary,” according to the company.
It also stated that it intends to invest Rs 34.23 crore between 2024 and 2026 in the “expansion of EBOs in India across a mix of mall stores and high-street outlets in India.” “‘Our Company intends to establish 132 new EBOs across India,’ it said. It had 35 such stores across the country as of September 30.
Furthermore, it intends to spend Rs 27.52 crore from its IPO proceeds to open 20 new BBlunt salons between FY24 and FY26.
Mamaearth sells its products through its platform and marketplaces, such as Amazon, Flipkart, Nykaa, and offline supermarket stores.
