Mamaearth IPO On Hold, Says Report The D2C skincare brand has, however, declined the claim and stated that it is still in conversation with SEBI on its DRHP and will have 12 months from approval to file its final prospectus
Opinions expressed by BIZ Experiences contributors are their own.
You're reading BIZ Experiences India, an international franchise of BIZ Experiences Media.
D2C skincare brand Mamaearth has delayed its initial Public Offering (IPO) to raise $200 to $300 million, according to a Reuters report that attributes the move to unfavourable market conditions.
The company is now in a "wait and watch mode" due to the turbulence in stock markets globally amid worries about the financial health of banks, added the report.
While the report states that the IPO has been "put on hold", the brand has declined confirming the same, instead insisting that it is still in conversation with the Securities and Exchange Board of India (SEBI) on its Draft Red Herring Prospectus (DRHP) and will have 12 months from approval to file its final prospectus.
"We will continue with our efforts to market the IPO—meeting with investors, roadshows, etc.—and through those we will ourselves define the timeline on when to go public," said an official spokesperson.
Honasa Consumer Ltd, the parent company of Gurugram-based Mamaearth, filed its documents for an IPO in December 2022, planning to issue new equity and offer the sale of some existing shares towards raising around $200 million to $300 million. This could have valued the company at up to $3 billion, a steep rise from its last valuation at $1.2 billion in January 2022. Given that Mamaearth's net profit in FY22 was INR 14 crore, this jump in valuation would have rendered the price-to-earnings (P/E) multiple an astounding 1,714 times. Naturally, its DRHP drew a lot of attention as well as censure on social media upon its filing. The company's founders and promoters Ghazal and Varun Alagh clarified through Twitter and LinkedIn posts that they had neither quoted nor subscribed to such valuation numbers and that valuation discovery was a lengthy process that required deeper conversations with the investor community.
Founded in 2016, Mamaearth offers toxin-free, natural baby care, skincare and hair care products. Since its inception, the parent company's portfolio has expanded to include five new brands: The Derma Company, Aqualogica, Ayuga, BBlunt, and Dr Sheth's.
In the wake of Indian companies such as FabIndia, Snapdeal and boAt shelving their IPO plans, the question of whether or not Mamaearth's IPO has indeed been put on hold hangs in the balance. Meanwhile, Varun Alagh has said, "Our largest investor (Sequoia) is not selling a single share and also the promoters will continue to own over 97 per cent of their ownership in the company after the IPO. Hence we have no interest in optimizing for short term valuations, we are in this for the long term."
