The IPO, which opens on October 31, consists of a fresh issue of shares worth Rs 365 crore, and an offer-for-sale (OFS) of Rs 1,336 crore. Bidding for anchor investors will open on October 30.
In December last year, when Honasa Consumer had issued its draft red herring prospectus, the company had planned for a Rs 400 crore fresh issue. The OFS component of 41.25 million shares has also been reduced from an initially planned 46.82 million.
At the upper end of the price band, the company will be valued at Rs 10,425 crore, or around $1.25 billion. This is marginally higher than the $1.15 billion valuation at which it last raised private funding in January 2022. At the time, the company raised $52 million.
Among the selling shareholders, Honasa cofounders Varun Alagh and Ghazal Alagh will sell stakes worth up to Rs 103 crore and Rs 3 crore, respectively.
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The company’s investors, Stellaris Venture Partners and Sofina, will sell stakes worth up to Rs 355 crore and Rs 310 crore, respectively. Fireside Ventures will sell shares worth up to Rs 258 crore, while Marico’s Rishabh Mariwala will sell his stake worth up to Rs 185 crore. Other selling shareholders include Snapdeal cofounders Kunal Bahl and Rohit Bansal, and actor Shilpa Shetty Kundra.For public investors, the company said, bids can be made for a minimum of 46 equity shares and in multiples of 46 equity shares thereafter. “Discount of Rs 30 per equity share is being offered to eligible employees bidding in the employee reservation portion,” it added. Honasa has earmarked Rs 1 crore worth of shares for its employees.
The company has reserved up to 10% of the issue size for retail investors, while 15% has been allocated to high net worth individuals (HNIs). The remaining 75% has been reserved for qualified institutional buyers (QIB).
Financial overview
In an interaction with ET, Honasa Consumer’s cofounder and chief innovation officer, Ghazal Alagh, said the company’s management was focussed on growing its topline as well as boosting profitability going forward.
For the quarter ended June 30, Honasa Consumer reported revenue from operations of Rs 464.49 crore, a 49% increase from the year-ago period. Net profit stood at Rs 9.24 crore, against a loss of Rs 2.51 crore a year ago.
For FY23, the omnichannel retail company reported a net loss of Rs 150.97 crore, compared with a net profit of Rs 14.44 crore in FY22. Its operating revenue, however, increased 58% year-on-year to Rs 1,492.75 crore.
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Alagh said the annual loss in FY23 was on account of an exceptional item, and that the company was operationally in profit during the period.
“We’ve done three acquisitions till date. Two are brand acquisitions – Bblunt, and Dr Sheth’s, and one was a content platform called Momspresso. Momspresso was not scaling efficiently the way we wanted it to, for that matter, it was becoming a drag on our P&L, because of which last year we decided to shut that business down,” she said, adding that the exceptional item was on account of the company taking a full impairment of Momspresso.
“If you just remove that, the business was actually profitable last year. The company is still profitable as it continues to evolve, and that’s what we see in the future as well,” she added.
Growth strategy
Honasa Consumer operates six brands – Mamaearth, The Derma Co, Bblunt, Ayuga, Aqualogica and Dr Sheth’s. Mamaearth is the flagship brand, bringing in the highest revenue for the Gurugram-based company.
For the June quarter, Mamaearth reported operating revenue of Rs 303.63 crore, representing 67.1% of total revenue from operations.
Alagh said that in the near-term, while the company was putting its weight behind growing its younger brands, Mamaearth would continue to be the biggest one in play. The brand is also at the heart of the company’s offline strategy.
“Every brand goes through a journey. For Mamaearth, which is now present online as well as offline, the focus there is to find the next set of consumers…reality is that 80% of the transactions within the beauty and personal care segment are still happening offline and hence that’s going to be the largest driver of growth for us,” Alagh said.
“On the other hand, for our newer brands like Aqualogica or Dr Sheth’s, we still feel that there are a lot of consumers online who are looking because they are early adopters,” she added.
Going ahead, the company is betting on the premiumisation of the beauty and personal care segment. “We are currently positioned at a slightly mass premium play across all of our brands. In the short term, that’s the focus that we are going to drive in the future as well, but we are betting on premiumisation as a trend,” Alagh said
“We are betting on the fact that disposable incomes in India are rising, the fact that more women are now joining the workforce, and that’s the trend which is going to grow this category even forward,” she added.