NEW DELHI: Amid a slew of initial public offer (IPO) launches in the current volatile market, the initial share sale of Honasa Consumer, the parent firm of direct-to-consumer (DTC) brand Mamaearth, will be available for subscription from Tuesday.
The market would keenly watch the response the beauty and personal company receives it is seeking a valuation of over Rs 10,000 crore. Honasa, which also owns The Derma Co brand, on Monday said it has allotted 2.36 crore equity shares to 49 anchor investors and raised Rs 765.20 crore ahead of the IPO. The shares were allotted at the upper price band of Rs 324 per share.
Honasa said nearly 28 marquee investors have received shares via anchor book. Some of the participating FPIs are Capital Group, Fidelity International Ltd, Norges Bank, Abu Dhabi Investment Authority, First Sentier (First State Investments), White Oak, Franklin Templeton, Kotak, DSP, Carmigniac Gestion, Loomis Sayles, Matthews, Pictet and Hornbill.
While the FPIs were allocated 54.7% of anchor allocation, the remaining went to domestic investors. Domestic mutual funds and insurance companies were also allocated shares. Honasa IPO is priced between `308-324 per share, with the objective of raising `1,701 crore. This includes a fresh issue of shares worth `365 crore and an offer-for-sale (OFS) of 4.13 crore equity shares by promoters and investors. Under the OFS, founders Varun Alagh and Ghazal Alagh along with investors such as Kunal Bahl, Shilpa Shetty, Rishabh Mariwala will offload partial stakes.
While the company has registered impressive growth in the last few years, most analysts have termed the IPO expensive and a few have asked investors to avoid subscribing. At the upper price band, Honasa will have a market capitalisation of Rs 10,425 crore. In FY23, Honasa reported a net loss of Rs 150.97 crore, compared with a net profit of Rs 14.44 crore in FY22. Operating revenue increased 58% year-on-year to Rs 1,492.75 crore last fiscal.
“Based on its annualised FY24 earning per share, the IPO appears to be aggressively priced at 97x, discounting all immediate positive factors and seems like it is leveraging its proven track record to justify a premium valuation. We recommend an “AVOID” rating for the issue and would revisit the company following consistent and sustainable improvement in profitability,” said Stoxbox in its IPO report. Meanwhile, consumer goods company Cello World IPO was subscribed 38% on day 1. The IPO, a complete OFS, involves the sale of Rs 5 face value shares totalling Rs 1,900 crore by promoters and other shareholders.