Market volatility saw most start-ups postpone or shelve IPO plans, but Mamaearth's parent company ended the year submitting a Draft Red Herring Prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering. Buoyed by confidence from its profitability, Honasa Consumer Ltd. ended 2022 filing for an IPO comprising a new issue of shares worth 4 billion rupees ($48.30 million) and an offer to sell 46.8 million shares.

Honasa Consumer Pvt. Ltd. (HCPL) was founded in 2016 by husband-and-wife duo Varun and Ghazal Alagh, and the company's portfolio of brands consists of Mamaearth, The Derma Co, BBlunt, and Dr. Sheth's. The company was last valued at $1.2 billion in January 2022 when it raised $52 million from investors.

Investors looking to sell their stake in Honasa via the offer for sale include Sofina, Stellaris Venture Partners, Fireside Ventures, and Bollywood actor Shilpa Shetty. Kotak Mahindra Capital, Citigroup Global Markets India, JM Financial Ltd, and J.P. Morgan India Private Ltd are the book-running lead managers for the issue.

In the offering documents Honasa Consumer said it plans to use the IPO proceeds towards advertising expenses, capital expenditure in setting up new exclusive brand outlets, investment in its subsidiary BBlunt for opening up new salons, and general corporate purposes and unidentified inorganic acquisitions.

The Details:

• The company became profitable in FY22 with net earnings of Rs 14 crore, compared to losses of Rs 1,332 crore in FY21 and Rs 428 crore in FY20. In the first half of FY23, the company registered a net profit of 4 crore.
• The company has claimed in its IPO prospectus that it is deriving benefits from economies of scale, as its gross profit margin improved over 3 percentage points from 66.5 percent in FY20 to 69.96 percent in FY22.
• Mamaearth's ad expenses outstripped its sales growth as this cost center expanded 120 percent to Rs 391 crore in FY22. 
• Its sales commission to e-commerce marketplaces grew 114 percent to Rs 29 crore in FY22.
• Revenue from operations rose 318 percent to Rs 460 crore in FY21, and the company registered growth of 105 percent to Rs 943 crore in FY22.

The History:

• In May 2022, Honasa Consumer acquired a majority stake in skincare brand Dr. Sheth's at a valuation of INR 28 Cr. 
• In January 2022, Honasa Consumer raised $52 million in a funding round led by Sequoia, reaching unicorn status with a valuation of $1.2 billion. Other investors in the round included Sofina and Evolvence. 
• In July 2021, the company raised $50 million in a funding round led by Sofina Ventures, valuing it at $730 million.
• In January 2020, Mamaearth's parent company Honasa raised INR 130 Cr ($18 million) in a Series B funding round.