Mamaearth’s plans put risky new-age IPOs in focus

Social media is abuzz with claims that Mamaearth would seek a P/E ratio of over 1,600 times its last fiscal year’s profit.
Social media is abuzz with claims that Mamaearth would seek a P/E ratio of over 1,600 times its last fiscal year’s profit.

Summary

Experts say higher valuation is justified if a company can chart a realistic path.

New-age firms going for public listings have failed to inspire in recent times. So when Honasa Consumer Pvt. Ltd, the parent of skin care brand Mamaearth, filed its draft papers on 29 December, prospective investors got worried. The company had not quoted a valuation figure, but based on an earlier Reuters report, social media users put two and two together to conclude that Mamaearth would seek a steep valuation—or, price-to-earnings (P/E) ratio—of over 1,600 times its last fiscal year’s profit (the company has proposed a fresh issue of equity shares worth up to 400 crore and an offer for sale of up to 46.8 million shares). 

You might also like 

Budget may offer sops for shift to green mobility

With $1 billion, Apax leads in race for Quest Global stake

Why Europe’s largest asset manager is betting big on India

The spotlight is again on new-age IPOs that are seen as risky due to uncertainty in their businesses. Experts say higher valuation is justified if a company can chart a realistic path.

Graphic: Mint
View Full Image
Graphic: Mint

Elsewhere in Mint

In Opinion, Manu Joseph analyses the myths around the first martyr of the internet. Merryn Somerset Webb says it's a gamble to let woke ideas form your portfolio. Nitin Pai writes on the chances of an open decentralized internet. Long Story showcases 27 tech wonders from CES Las Vegas.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

topics

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App