Mamaearth Lists on NSE, BSE: Honasa Consumer saw an uninspiring start on the bourses on November 7. Shares of Mamaearth’s parent company started trading at Rs 330 on the NSE and Rs 324 on the BSE, against issue price of Rs 324.
A day before listing, shares of Mamaearth were commanding a premium of Rs 26 per share in the grey market, signaling a decent landing on Dalal Street with a listing pop of 8 per cent.
The grey market is an unofficial trading platform where shares get traded well before the allotment in the IPO and until the listing day. Most investors track the grey market to get an idea of the listing price.
Mamaearth’s IPO had sailed through, led by qualified institutional bidders (QIB) who bought 11.5 times while retail investors remained cautious, subscribing 1.4 times the allotted quota.
The company reported a net loss of Rs 150.9 crore during the year ended March 2023, impacted by the impairment loss on goodwill and other intangible assets, against a profit of Rs 14.4 crore in the previous year.
The volume growth fell significantly to 68.23 per cent in FY23 from 143.3 per cent in FY22 and 298.42 per cent in FY21. However, revenue from operations grew at a CAGR of 80.14 per cent during FY21-FY23.
The parent firm of Mamaearth attracted interest from marquee names like Smallcap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Government Pension Fund Global, Caisee De Depot ET Placement, FSSA India Suncontinent Fund, Carmignac Portfolio, Goldman Sachs, and Hornbill Orchid India Fund.
Honasa Consumer claims to be the largest digital-first beauty and personal care company in India in terms of revenue from operations for the fiscal FY23. Its Mamaearth brand, which launched in 2016, has emerged as the fastest-growing BPC brand in India to reach an annual revenue of Rs 1,000 crore within six years.
What Should Investors Do Now?
Shivani Nyati of Swastika Investmart, recommending investors to book profit and exit their position.
“While Honasa Consumer is still a relatively young company, it has quickly grown to become a major player in the Indian BPC market. The company has a diverse product portfolio that includes face care, baby care, hair care, body care, color cosmetics, and fragrances. However, the financial condition of the company is facing some turbulence, and there are other operation-related risks as well,” Nyati said.
Anushi Vakharia of StoxBox recommended investors who are allotted shares to book profits, if any, on the listing day and to revisit the company following consistent and sustainable improvement in profitability.
“We recommend to book partial profit and hold partial allotment for a long term as the company has brand building capabilities and repeatable playbooks. Also, the company’s customer centric product innovation and digital-first omnichannel distribution along with data driven contextualised marketing with ability to drive growth and profitability in a capital efficient manner infuse optimism in long term growth outlook,” said Astha Jain, Research Analyst at Hem Securities.
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