Bahl and Bansal are each selling 11,93,250 shares out of the total 23,86,500 shares owned by each of them ahead of the IPO. The duo had bought each 11.9 lakh shares at about Rs 38.30 lakh and are now selling them at Rs 38.66 crore in the IPO, which includes an offer for sale (OFS).
Others offloading partial stakes in the OFS include promoters and the husband-wife team of Varun Alagh and Ghazal Alagh, Rishabh Harsh Mariwala, Bollywood actor Shilpa Shetty Kundra, Fireside Ventures, Sofina and Stellaris.
Shilpa Shetty is selling 13.9 lakh shares which she had acquired in 2018 at an average cost price of just Rs 41.86 per share. The actress is making a smart profit of 674%.
Rishabh Harsh Mariwala, the son of Marico founder Harsh Mariwala, is also selling around 57 lakh shares bought at Rs 6.05 per share. His return stands at 5,255%.
Based on the upper price band of Rs 324, Mamaearth is seeking a post-IPO market capitalisation of Rs 10,425 crore. Out of the total IPO size of Rs 1,701.44 crore, the OFS size is worth Rs 1,336.44 crore and a fresh issue of Rs 365 crore.
Post IPO, the shareholding of promoters would come down to 35.3%. Started in 2016 with the launch of its flagship brand Mamaearth, which focuses on developing toxin-free beauty products made with natural ingredients, the company reported a revenue of Rs 464.5 crore in Q1 and a profit of Rs 2.47 crore. Its revenue has grown at a CAGR of 80% over FY21-23 with a volume growth of 102.28%.
With a gross margin of more than 70%, the company is looking to improve profitability in the business (EBITDA margin at ~2% for FY23/~6% for Q1FY24) by scaling up operations.
Emkay Global said the valuation at EV/sales of 3.5x and EV/EBITDA of 29x for FY26E is attractive if the FMCG firm is able to double its revenue in three years and improves operating profit margin to 12%.
“Honasa, with its ‘house of brands’ portfolio, is aptly equipped to capitalize on the swiftly-growing beauty & personal care segment in FMCG space. As its flagship brand Mamaearth gains scale (revenue ARR: ~Rs14bn), Honasa has the playbook in place for its relatively recently incubated/acquired brands, which are seeing faster growth,” said Emkay’s Nitin Gupta.
Canara Bank Securities has issued a subscribe rating on the IPO saying that Honasa’s asset light model enables them to invest more on marketing, technology and product innovation.
“The company continuously strives for expansion of distribution by creating brand awareness. In terms of valuation, the company is available at EV/S of 6.76x which seems fairly valued. We recommend subscribing for the long term,” the brokerage said.
The IPO closes for subscription on November 2 and may list on exchanges on November 10.
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