Mamaearth IPO: Mamaearth's parent Honasa Consumer IPO has opened for subscription today (Tuesday, October 31), and will close on Thursday, November 2. Honasa Consumer IPO raised a capital of ₹765.20 crore from anchor investors on Monday, October 30. Seven prominent mutual funds invested ₹253 crore in the Mamaearth IPO, receiving 33.1% of the anchor allocation.
Mamaearth IPO set the price band for its issue at ₹308-324 per equity share of face value of ₹10 each.
Mamaearth IPO consists of an offer for sale (OFS) of around 4.12 crore shares and a fresh share issuance of up to ₹365 crore. The company expects to raise about ₹1701.44 crore on the upper price band. As a result, the company was valued at ₹10, 424.53 crore.
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The IPO will see the sale of 3,186,300 shares by Honasa promoter Varun Alagh and up to 100,000 shares by his wife Ghazal Alagh. A number of other shareholders, including Kunal Bahl, Shilpa Shetty Kundra, Rishabh Harsh Mariwala, Fireside Ventures Fund, Sofina, Stellaris, and Rohit Kumar Bansal, will be selling their stakes in the OFS.
Mamaearth IPO subscription status
Mamaearth IPO has been subscribed 3% on day 1, so far. Mamaearth IPO's retail investors portion was subscribed 14%, NII portion was subscribed 1%, and Qualified Institutional Buyers (QIB) portion were yet to see subscriptions. However, employee portion was booked 1.05 times.
Mamaearth IPO has reserved not less than 75% of the shares in the public issue for Qualified Institutional Buyers (QIB), not more than 15% for Non Institutional Investors (NII), and not more than 10% of the offer is reserved for Retail Investors. A discount of ₹30 per equity share is being offered to eligible employees bidding in the employee reserve portion.
Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):
Honasa Consumer IPO - Key Risks
- In the past the company had incurred losses. The company and the value of the equity shares could be severely impacted by any losses in the future. "We have recorded losses in the past for Financial Years 2021 and 2023, and the three months period ended June 30, 2022, wherein our restated loss was ₹13,322.15 million, ₹1,509.66 million, and ₹115.26 million, respectively," said the company in its RHP.
- The Mamaearth brand generates a significant portion of the company's revenue from operations through product sales. The firm, financial flows, and operational results could all suffer from a decline in the market for Mamaearth-branded goods.
- The company has historically experienced high advertising costs, which have helped to fuel an increase in its revenue from operations. The advertising spend as a proportion of operating revenue for the Financial Years 2021, 2022, and 2023, as well as the three months ending June 30, 2022 and June 30, 2023, was 38.68%, 41.49%, 35.52%, 41.33%, and 34.99%, in that order. There's no guarantee that the company will be able to sustain the same rate of increase in revenue from operations in the future as it did in prior years/periods if it cuts back on its advertising expenditures.
- The business and the demand for the services could be negatively impacted by a company's marketing strategy that heavily relies on celebrities and social media influencers.
- Sales through the company's online channel are mostly derived from the company's agreements with specific marketplaces and web traffic sources. The company's operations, financial situation, cash flows, and business could all suffer if it fails to preserve these partnerships.
- Due to intense competition, the company may lose market share, have to spend more on marketing and advertising, and have to give discounts. All of these actions could have a negative impact on the company's operations and lower profitability.
- The price band, offer price, market capitalisation to total turnover, and price to earnings ratio determined by the company's offer price might not accurately reflect the market price of the business at the time of listing or in the future. "Additionally, we are unable to ascertain the P/E ratio for Fiscal 2023, while the average P/E ratio of competitor entities is 53.63," the company said.
- The company's operations, financial position, cash flows, and business could all suffer if it is unable to grow or manage its offline sales network.
- The company depends on a number of third-party service providers to market and deliver its goods to customers, as well as on outside technology suppliers for specific areas of its daily operations. Its operations, cash flows, financial situation, and business could all suffer from any problems or inefficiencies in these areas.
- Externally, Indian law might restrict the company's ability to raise foreign debt; a downgrade in India's ratings could have an impact on the price at which equity shares trade; and an increase in inflation in India could lead to higher costs, which would negatively impact operations and profits.
Mamaearth IPO GMP today
Mamaearth IPO GMP today or grey market premium is +7, similar to the previous three session. This indicates Mamaearth share price were trading at a premium of ₹7 in the grey market on Tuesday, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Mamaearth share price was indicated at ₹331 apiece, which is 2.16% higher than the IPO price of ₹324.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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