The initial public offering (IPO) of Honasa Consumer, the parent company of Mamaearth, was subscribed 7.61 times on Thursday (November 2), the final day of the bidding process. Out of 2.89 crore shares on offer, the issue had received applications for 22 crore shares, data from BSE and NSE showed.

Share Market Live

NSE

The qualified institutional buyers (QIB) category saw the maximum application and was subscribed 11.50 times, followed by the employee quota at 4.88 times. Employees will get the reserved shares at a discount of ₹30 per share to the final issue price of Mamaearth.

The portion for non institutional investors or high net-worth investors was subscribed 4.02 times while the retail investors quota was subscribed 1.35 times.

Honasa Consumer is selling its shares in the range of ₹308-324 apiece during the three-day bidding process, and investors can make a bid of a minimum of 46 equity shares and its multiples thereafter.

Mamaearth IPO GMP

Shares of the company, meanwhile, are commanding a marginal premium of ₹10 in the unlisted market today, according to market analysts.

The grey market is an unofficial platform wherein IPO shares can be bought and sold till the listing.

The market is divided on the IPO's prospects of Honasa Consumer, with some recommending a 'Subscribe' for those looking at a medium to long-term investment horizon, and others urging caution before committing.

The IPO, which includes a fresh share sale of ₹365 crore and an offer for sale of about 4.12 crore shares, is planning to raise ₹1,701 crore through the issue. The company is valued at ₹10,425 crore at the upper end of the price band.

Under the OFS, founders Varun Alagh and Ghazal Alagh along with investors Kunal Bahl, Shilpa Shetty, Rishabh Mariwala will offload partial stakes.

The direct-to-customer (D2C) company will use the proceeds from the listing for multiple purposes including advertising expenses, capital expenditure in setting up new exclusive brand outlets (EBOs), investment in its subsidiary BBlunt for opening new salons. The remaining amount from the proceeds will be used for general corporate purposes and unidentified inorganic acquisitions.

Why this $100 mn fund manager won't invest in Mamaearth, not right now

In an interaction on CNBC-TV18, Nilesh Shah of Envision Capital acknowledged the strength of the Mamaearth brand and its products but indicated that he wouldn't invest in it at present. Shah lauded the company's market presence and projected a significant revenue surge in the next 5-10 years.

"I would probably give it a pass right now. I think the business is great, the brand is selling, and the products are selling, undoubtedly. Therefore, in the next 5-10 years, this business – probably from ₹1,000 crore – will become ₹5,000-10,000 crore revenue company," Shah, who manages a portfolio worth over ₹835 crore, said.

The company has allocated 2.36, crore equity shares to 49 anchor investors to raise ₹765.2 crore ahead of the issue opening. The anchor book included marquee names such as Smallcap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Caisse De Depot ET Placement, Government Pension Fund Global, Goldman Sachs, Fundpartner Solutions and Hornbill Orchid India Fund.

Honasa Consumer provides beauty and personal care products through its digital platform serving more than 500 cities in India. The company has various consumer brands including Mamaearth, The Derma Co, Aqualogica, Dr Sheth's, and Ayuga. Honasa Consumer's product portfolio includes baby care, face care, body care, hair care, color cosmetics, and fragrances.

Kotak Mahindra Capital Company, Citigroup Global Markets India, JM Financial and JP Morgan India are book-running lead managers to the offer, while Kfin Technologies is the registrar. The equity shares will be listed on the BSE and the NSE.

First Published:Nov 2, 2023 1:48 PM IST