Honasa Consumer IPO Fails To Allure Investors, Lists Flat At BSE
Honasa Consumer, the parent company of Mamaearth, witnessed a dull debut on bourses with only 1.85 per cent gains on National Stock Exchange (NSE) at Rs 330 versus the issue price of Rs 324, whereas the stock debuted flat on Bombay Stock Exchange (BSE).
The timeline for the IPO subscription was 31 October to 2 November 2023, followed by listing on the NSE and the BSE on 7 November.
The total issue size IPO was Rs 1,710 which consisted of Rs 365 crore of fresh equity shares combined with Rs 1,336 of offer-for-sale (OFS) component with the price band of Rs 308 to 324 per equity share. Since the raised capital of Rs 1,336 was an OFS component, the firm will only receive net proceeds of Rs 365 crore from the offer.
Those offering shares in the OFS included promoters and founders Varun Alagh and Ghazal Alagh and investors like Kunal Bahl, Shilpa Shetty Kundra etc.
“The IPO was subscribed 7.95 times, which is a good subscription level. However, due to the financial condition of the company it is facing some turbulence, and there are other operation-related risks as well. After receiving a decent subscription, Stock was able to give a positive listing. Investors are now suggested to book profit and exit their position,” said Shivani Nyati, Head of Wealth, Swastika Investmart.
In the fiscal year 2022-23, the company reported an increase in total revenue of Rs 1,515 crore from Rs 964 crore in the previous fiscal year. However, the firm clocked a net loss of Rs 150 crore compared to a net profit of 14.44 crore in FY22.
Prashanth Tapse Sr VP Research analyst at Mehta equities said, "Flat listing was in line with our expectation, despite aggressive pricing and high ask valuations, though risky investors feel the price is good for long-term as the business model has high potential of growth.We would continue to remain cautious on Mamaearth on the back of the loss-making nature of the business, high portion of OFS, high competition with margin pressure, low promoter stake, and weak financials which suggest a cautionary stand as historical listings with high valuations have often faced post-listing challenges."
The company intends to utilise the net proceeds for the acquisition of unidentified inorganic, advertising, capital expenditure and general corporate purposes. In addition, the firm also intends to invest in its subsidiary, Bhabani Blunt Hairdressing through net proceeds.
Honasa Consumer is a new-age company that is known for its flagship brand, Mamaearth. The company offers a diverse range of products under its portfolio of six brands. The company has brand- building capabilities and it follows data-driven, contextualised marketing.
