Mamaearth shares list at 2% premium over IPO price

Shares of Honasa Consumer, which operates the Mamaearth brand, listed at a premium of just 1.8% over the issue price on Tuesday. The stock got listed at Rs 330 on NSE as against the IPO price of Rs 324. Meanwhile, on BSE, it debuted at Rs 324.

Ahead of the debut, the company’s shares traded at a premium of Rs 22 in the unlisted market.

Despite high valuations and mixed views from analysts, the public offer was subscribed 7.6 times at close, led by strong interest from institutional investors.

Analysts said most issues with high valuations in the recent past have struggled to deliver post listing. The company is valued at Rs 10,425 crore in the post-issue market cap.

“The market view on Mamaearth has now turned neutral from cautious, despite the risk of investing in a loss-making nature of the business and high competition with margin pressure,” said Prashanth Tapse of Mehta Equities.

Proceeds from the listing will be used for advertising expenses, capital expenditure in setting up new exclusive brand outlets (EBOs), investment in its subsidiary BBlunt for opening new salons, and for general corporate purposes and unidentified inorganic acquisitions.

Honasa Consumer, a beauty and personal care brand (BPC), has a product portfolio in the baby care, face care, body care, hair care, colour cosmetics and fragrances segment.

It operates six brands – Mamaearth, The Derma Co, Bblunt, Ayuga, Aqualogica and Dr Sheth. Mamaearth is the flagship brand, bringing in the highest revenue.

The company had posted a loss of Rs 151 crore in FY23 against a profit of Rs 14.4 crore a year earlier. The Delhi-based startup reported a 58% jump in its revenues to Rs 1,493 crore in the same period.

In the recent June quarter, its revenue from operations rose 49% year-on-year to Rs 464 crore. Net profit was at Rs 9.24 crore as against a loss of Rs 2.51 crore a year ago.

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Roy Walsh

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