Honasa Consumer Limited, the parent company of Mamaearth, has launched its Initial Public Offering (IPO) to raise ₹1,701 crore ($227 million). The public offer is open until November 2, 2023, with shares priced between ₹308-₹324. The IPO is trading at a ₹10 premium in the grey market today. The shares are available in lots of 46, requiring a minimum investment of ₹14,904.
The allotment is expected on either November 3 or November 6, 2023, with a proposed listing on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) slated for November 7 or November 10, respectively. The listing will be based on a T+3 schedule.
Emkay Global and Sushil Finance recommend subscribing to the IPO, given the company's financial performance. Mamaearth has reported an approximately 80.14% revenue Compound Annual Growth Rate (CAGR) for FY21-23. However, it recorded a negative Profit After Tax (PAT) margin for FY23 and an EBITDA margin of 1.52% for the same period. For Q1FY24, the company reported an Earnings Per Share (EPS) of ₹0.83, EBITDA and PAT margins of 6.31% and 5.32% respectively, and a PE multiple of 97.59x.
Despite these promising figures, some analysts have expressed reservations about the IPO. Swastika Investmart and Stoxbox have advised against subscribing due to inconsistent financials, aggressive pricing, and reliance on third-party manufacturing. Emkay Global suggests subscribing only if the company doubles its revenue in three years and improves its margins to 12%.
Axis Capital (NYSE:AXS) has highlighted Honasa's impressive revenue CAGR of 80.14% between FY21 and FY23, which factors into their positive outlook. Meanwhile, Sushil Finance maintains a neutral stance on the IPO.
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