On Tuesday, Honasa Consumer Limited (HCL), the parent company of Mamaearth, launched its IPO subscription worth approximately ₹1,701 crore ($226 million). The beauty and personal care firm, co-founded by Varun and Ghazal Alagh, is seeking a valuation of around ₹10,500 crore ($1.4 billion) at the upper end of the IPO price band. The IPO is expected to close on November 2, with shares likely to list on BSE and NSE on November 10, 2023.
The company has established a price band for the IPO at ₹308-₹324 per share. Investors can apply for a minimum of 46 equity shares and in multiples of 46 shares thereafter. The IPO aims to raise about ₹365 crore ($44 million) by issuing fresh equities and an additional ₹1,336 crore ($178 million) through an offer for sale (OFS) of 41,248,162 equity shares. Promoters Varun Alagh and Ghazal Alagh, along with existing shareholders Rohit Kumar Bansal and Sofina Ventures will sell their stakes. Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl also plan to offload their shares.
The funds raised from the IPO will be allocated towards advertisement and capital expenses, investment in its subsidiary Bhabani Blunt Hairdressing for setting up new salons, and other general corporate purposes. Of the ₹365 crore raised from fresh issue, HCL proposes to invest ₹186 crore for advertisement expenses; ₹34.23 crore for capital expenditure for setting up new EBOs; and ₹27.52 crore for investment in its subsidiary.
Despite posting a FY23 net loss of ₹151 crore ($20 million), HCL managed to increase its operating revenue by 58% to ₹1,493 crore ($198 million) in FY23 compared to ₹943 crore ($125 million) the previous year. The total expenditure surged 59.4% to ₹1,502 crore ($199 million) in FY23 from ₹942 crore ($125 million) in FY22.
On Monday, ahead of the IPO opening, HCL raised ₹765.2 crore ($100 million) by allocating 2.36 crore equity shares at ₹324 per share to anchor investors, which included seven domestic mutual funds and FPIs such as Capital Group, Fidelity International Ltd, Norges Bank, Abu Dhabi Investment Authority. Domestic investors such as ICICI Prudential (LON:PRU), Aditya Birla Sun Life (TSX:SLF), Nippon, Axis, Canara Robeco, Invesco and White Oak also participated. Life insurance companies like SBI Life Insurance, ICICI Life Insurance, Birla Life Insurance, Max Life Insurance, Bajaj Allianz (ETR:ALVG) Life Insurance and Bharti AXA Life Insurance were part of the domestic investors.
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