Mamaearth IPO GMP, Subscription, Review, Other Details; Should You Buy on Last Day?

Mamaearth IPO Subscription Day 3: Honasa Consumer, parent company behind beauty and personal care brand Mamaearth opened for subscription on October 31 and will close today, November 2. 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.

Honasa Consumer has mopped up Rs 765.2 crore from 49 anchor investors on October 30, the day before issue opening.

Mamaearth IPO: Subscription

At 10:12 IST, Mamaearth IPO has been subscribed 72% on day 3, where retail investors portion was subscribed 66%, NII portion was subscribed 12%, and Qualified Institutional Buyers (QIB) portion were booked 1.02 times, and employee portion was subscribed 3.39 times.

Mamaearth IPO: Price Band

The price band for the offer has been fixed at Rs 308-324 per share

Mamaearth IPO: Lot Size

The Mamaearth IPO lot size is 46 equity shares and in multiples of 46 equity shares thereafter.

Mamaearth IPO has reserved not less than 75 per cent of the shares in the public issue for qualified institutional buyers (QIB), not more than 15 per cent for non-institutional investors (NII), and not more than 10 per cent of the offer is reserved for Retail Investors.

A discount of Rs 30 per equity share is being offered to eligible employees bidding in the employee reserve portion.

Mamaearth IPO: Promoters

Those offering shares in the OFS include promoters and founders — Varun Alagh and Ghazal Alagh — and investors like Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, Rishabh Harsh Mariwala and Bollywood actor Shilpa Shetty Kundra.

Promoters including Varun Alagh and Ghazal Alagh hold 37.41 percent stake in Honasa, and the rest of shareholding is owned by public including Peak XV Partners, Fireside Ventures Fund, Stellaris and Sofina.

Mamaearth IPO: Objective

Proceeds from the fresh issue would be utilised towards advertising expenses to improve awareness and brand visibility, setting up new exclusive brand outlets, investment in its subsidiary BBlunt for setting up new salons, general corporate purposes, and inorganic acquisition.

Mamaearth IPO: About the Company

The Gurugram-based beauty and personal care company was founded in 2016 by husband-wife duo Varun and Ghazal Alagh. It began with the launch of Mamaearth and over the years added five more brands to its portfolio, including The Derma Co, Aqualogica, Ayuga, BBlunt, and Dr Sheth’s, and built a ‘House of Brands’ architecture.

In January 2022, the company entered the unicorn club. Kotak Mahindra Capital Company, Citigroup Global Markets India, JM Financial and JP Morgan India Pvt Ltd are the book-running lead managers to the issue. The equity shares of the company will be listed on the BSE and NSE.

Mamaearth IPO: Share Allotment & Listing

The Sequoia Capital-backed firm will finalise the basis of allotment of IPO shares by the end of November 7. Equity shares will be credited to demat accounts of successful investors by November 9.

The trading in its equity shares will commence on the BSE and NSE, with effect from November 10, as per the IPO schedule.

Mamaearth IPO: GMP

Mamaearth IPO GMP today or grey market premium is +9, similar to the previous session. This indicates Mamaearth share price were trading at a premium of Rs 9 in the grey market on Thursday, 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 Rs 333 apiece, which is 2.78% higher than the IPO price of Rs 324.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Mamaearth IPO: Whether To Buy or Not

Giving ‘subscribe’ tag to the IPO, Emkay Global said, “We assess the stock’s valuation for three scenarios (considering the upper-end of the band): i) Attractive (EV/sales of 3.5x and EV/EBITDA of 29x for FY26E), if Company doubles revenue in three years and improves OPM to ~12%; ii) Fair (EV/sales of 4.2x and EV/EBITDA of 41.7x for FY26E), if Company sees revenue CAGR of 20% with OPM of 10%; and iii) Expensive (EV/sales of 5.2x and EV/EBITDA of 87x for FY26E), if Company registers revenue CAGR of ~10% and maintains margin at ~6%).”

Honasa Consumer is the largest personal care and digital first beauty company in terms of revenue as of FY2023. The company has established a digital first omnichannel distribution network across online and offline channels. The revenue for the company has grown at a CAGR of 80 per cent over FY 21-23 with a volume growth of 102.28 per cent, said Canara Bank Securities.

“The company has an adjusted EBITDA of 3.4 per cent as of FY23 with negative working capital on account of the asset light model that enables them to invest more on marketing, technology and product innovation . The company continuously strives for expansion of distribution by creating brand awareness,” it added with a ‘subscribe for long term’ recommendation for the issue.