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Honasa Consumer Limited (Mamaearth) IPO Company Profile:

Honasa Consumer Limited is the largest digital-first beauty and personal care (“BPC”) company in India in terms of revenue from operations for the Financial Year 2022. Since its inception, the company has worked with the primary objective of developing products that address beauty and personal care problems faced by consumers. For instance, the company’s flagship brand, Mamaearth, is built to service a core customer need for safe-to-use, natural products, and focuses on developing toxin-free beauty products made with natural ingredients. According to the RedSeer Report, as of September 30, 2022, Mamaearth has emerged as the fastest-growing BPC brand in India to reach an annual revenue of ₹10 billion in the preceding 12 months within six years of launch.

Since launching Mamaearth in 2016, the company has added five new brands to our portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt, and Dr. Sheth’s, and has built a ‘House of Brands’ architecture. As of September 30, 2022, the company’s portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics, and fragrances segments.


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    Honasa Consumer Limited (Mamaearth) IPO Brands:

    • Mamaearth:

      Established in 2016, Mamaearth is Honasa Consumer Limited’s flagship brand that focuses on developing toxin-free beauty products made with natural ingredients. Mamaearth was India’s largest digital-first BPC brand in India in terms of revenue from operations in the Financial Year 2022. Initially introduced as a natural ingredients-led baby care brand with products inspired by traditional DIY beauty recipes, Mamaearth was aimed at parents who were increasingly concerned about the ingredients used in baby products. Mamaearth’s product offering has since extended beyond baby care products and is now an established BPC platform brand with products across baby care, hair care, face care, body care, color cosmetics, and fragrances.

    • The Derma Co.:

      Honasa Consumer Limited launched The Derma Co. in 2020 to provide solutions for skin and hair conditions through a range of active ingredient-based products. The brand is focused on making these solutions easily accessible to consumers across digital and retail touchpoints. The brand offers a range of products that help resolve diverse concerns like active acne, acne marks, pigmentation, dull skin, ageing, hair loss, dandruff, etc. The brand offers an AI-enabled experience to consumers in the form of real-time skin assessment analysis to help them detect skin conditions and identify specific products or regimes for treatment.

    • Aqualogica:

      Launched in November 2021, Aqualogica is Honasa Consumer Limited’s specialized skincare brand that leverages the science of hydration to introduce products suited to Indian skin types. Aqualogica’s formulations blend the purity of fruits with the science of actives to develop hydrating products for face and body care. The company has curated four ranges under this brand which are Hydrate+, Glow+, Radiance+, and Clear+.

    • Ayuga:

      Launched in December 2021, Ayuga aims to make the traditional wisdom of Ayurveda relevant for Indian millennials by curating products in easy-to-use, modern formats that can easily fit in a consumer’s daily skin and hair care regime. Ayuga products span the face, body, and hair care product categories, and include products such as night gel, face serum, sunscreen, shampoo, conditioner, and hair serum

    • BBlunt:

      Honasa Consumer Limited acquired BBlunt in March 2022 with the objective of extending its portfolio to specialized professional hair care and styling segments. BBlunt seeks to replicate a salon-like experience for consumers at home by offering a wide range of products including shampoos, conditioners, hair serums, hair color, heat protection mist, and hair sprays.

    • Sheth’s:

      Acquired in April 2022 and operating through Honasa Consumer Limited’s Subsidiary, Fusion Cosmeceutics Private Limited, which became wholly owned by the company in December 2022, Dr. Sheth’s offers specialized skincare solutions crafted with a combination of natural and active ingredients. Dr. Sheth’s was developed by three generations of skin specialists with a focus on naturally inspired and scientifically validated products.

    • BBlunt Salons:

      Honasa Consumer Limited acquired BBlunt Salons along with the BBlunt product business in March 2022. Operating under the subsidiary, Bhabani Blunt Hairdressing Private Limited, through BBlunt Salons, the company offers hair care, grooming, and styling services for women and men across nine leased outlets in Mumbai and Bangalore, as on September 30, 2022.

    • Momspresso:

      Momspresso was launched in 2016 and acquired by Honasa Consumer Limited in December 2021. As a content platform operating under the Subsidiary, Just4Kids Services Private Limited.

     

    Honasa Consumer Limited (Mamaearth) IPO Details:

    IPO Open Date Not Available
    IPO Close Date Not Available
    Listing Date Not Available
    Face Value ₹10 per share
    Price Not Available
    Lot Size Not Available
    Issue Size Not Available
    Fresh Issue [●] shares

    (aggregating up to ₹400 Cr)

    Offer For Sale 46,819,635 shares

    (aggregating up to ₹[●] Cr)

    Issue Type Book Built Issue IPO
    Listing At BSE, NSE
    QIB Shares Offered Not more than 75% of the Offer
    NII (HNI) Shares Offered Not less than 15% of the Offer
    Retail Shares Offered Not less than 10% of the Offer
    Promoters Varun Alagh and Ghazal Alagh

    Honasa Consumer Limited (Mamaearth) IPO Financial Analysis:

    Particulars 3M of FY-23(in cr.) FY-22(in cr.) FY-21(in cr.) FY-20(in cr.) CAGR
    Revenue from Operations 722.74 943.47 459.99 109.78 104.8%
    Other Income 9.33 20.88 12.11 4.38
    Cost of Goods Sold 212.72 283.44 132.71 36.78 97.5%
    Employee Cost 77.79 78.85 27.76 8.90
    Other expenses 418.33 569.72 272.32 71.95
    EBITDA 23.24 32.34 39.32 -3.46
    EBITDA margin% 3.22% 3.43% 8.55% -3.15%  
    Depreciation 11.04 6.90 1.71 0.65
    Interest 3.07 3.01 0.98 0.05
    Change in fair valuation of preference shares 0.00 0.00 1361.24 423.87
    Profit / (loss) before tax 9.13 22.44 -1324.61 -428.03
    Total tax 5.46 8.00 7.61 0.00
    Profit / (loss) After-tax 3.67 14.44 -1332.22 -428.03
    Profit / (loss) After-tax margin% 0.51% 1.53% -289.62% -389.88%  

    Major Shareholders of Honasa Consumer Limited (Mamaearth) IPO:

    S.NO. Name of the Shareholder No. of Shares Number of

    NCCCPS

    % of pre-Offer shareholding*
    1 Varun Alagh 106,737,650 34.30%
    2 SCI VI 5,160,000 4,298 19.48%
    3 Fireside Ventures Fund 1,844,700 2,363 10.39%
    4 Stellaris 1,844,700 2,148 9.50%
    5 Sofina 3,302,400 2,034 9.49%
    6 SCI III 2,850,900 872 4.53%
    7 Ghazal Alagh 10,065,200 3.23%
    8 Rishabh Harsh Mariwala 1,116,900 707 2.93%
    9 Evolvence India Fund III Ltd 164 1.10%
      Total   94.95%

    *  – Calculated on the basis of total Equity Shares held and such number of Equity Shares which will result upon conversion of outstanding NCCCPS and vested options under the ESOP Schemes

    Selling Shareholders of Honasa Consumer Limited (Mamaearth) IPO

    S.NO. Name of the Shareholder No. of Shares Number of

    NCCCPS

    % of pre-Offer shareholding*
    1 Varun Alagh 106,737,650 34.30%
    2 Ghazal Alagh 10,065,200 3.23%
    3 Evolvence India Coinvest PCC, invested through its Cell E 877,200 0.28%
    4 Evolvence India Fund III Ltd 1,315,800 164 1.10%
    5 Fireside Ventures Fund 1,844,700 2,363 10.39%
    6 Sofina 3,302,400 2,034 9.49%
    7 Stellaris 1,844,700 2,148 9.50%
    8 Rishabh Harsh Mariwala 707 2.93%
    9 Kunal Bahl 185 0.77%
    10 Rohit Kumar Bansal 185 0.77%
    11 Shilpa Shetty Kundra 1,623,635 0.52%
      Total   73.28%

    *  – Calculated on the basis of total Equity Shares held and such number of Equity Shares which will result upon conversion of outstanding NCCCPS and vested options under the ESOP Schemes

    Honasa Consumer Limited (Mamaearth) IPO Offer for Sale Details:

    S. No. Name of the Selling Shareholder Number of Equity Shares

    being offered in the Offer for Sale (Up to)

    1. Varun Alagh 3,186,300 Equity Shares
    2. Ghazal Alagh 100,000 Equity Shares
    3. Evolvence India Coinvest PCC, invested through its Cell E 220,613 Equity Shares
    4. Evolvence India Fund III Ltd 862,987 Equity Shares
    5. Fireside Ventures Fund 7,972,478 Equity Shares
    6. Sofina 19,133,948 Equity Shares
    7. Stellaris 12,755,965 Equity Shares
    8. Rishabh Harsh Mariwala 777,672 Equity Shares
    9. Kunal Bahl 477,300 Equity Shares
    10. Rohit Kumar Bansal 777,672 Equity Shares
    11. Shilpa Shetty Kundra 554,700 Equity Shares

    Honasa Consumer Limited (Mamaearth) IPO Strengths:

    • The BPC products market in India is undergoing a fundamental re-industrialization owing to the convergence of technology, demographic dividend, and growing consumer aspirations. Moreover, the market for BPC products in India is expected to grow from approximately $17 billion in 2021 to approximately $30 billion in 2026 at a CAGR of approximately 12%, which is among the highest within the broader retail categories and faster than other retail categories

    • Millennials in India are becoming increasingly conscious of their beauty and personal care needs and the brands they consume. Moreover, they are also more acutely oriented towards new-age innovations that cater to their specific needs and preferences, as compared to mass market propositions that cater to more mainstream or functional need spaces. Keeping with Honasa Consumer Limited’s customer-centric approach, the company has responded to this changing consumer dynamic and has introduced new BPC brands and products in its portfolio over the last six years.

    • Honasa Consumer Limited launched at least 2.6 times the number of new SKUs than the BPC industry median in Financial Year 2022. This ability to successfully introduce new innovations, and conceptualize and build new brands have been and will continue to be critical to the company’s success

    • Mamaearth

      has emerged as the fastest-growing BPC brand in India to reach an annual revenue of ₹10 billion (in the preceding 12 months) within six years of launch and was India’s largest digital-first BPC brand in terms of revenue in Financial Year 2022. In a short period of time since its launch in 2016, Mamaearth became India’s most searched BPC brand on Google Trends between January 2020 and November 2022

    • Honasa Consumer Limited’s omnichannel network allows it to be present across various touchpoints and serve its consumers wherever they shop. The company’s distribution model is led by its digital presence (DTC and e-commerce marketplaces), from which it derived ₹659.53 crores and ₹429.12 crores of revenue, accounting for 69.91% and 59.37% of its total revenue from operations from all the brands during the Financial Year 2022 and the six months period ended September 30, 2022, respectively.

    • Honasa Consumer Limited has adopted a marketing model through which it activates consumer engagement initiatives across multiple media platforms and channels. With a combination of digital and traditional marketing, it delivers a consistent narrative about the brands and their proposition across all touch points relevant for the consumers. Through these initiatives, Honasa Consumer Limited aims to target consumers across the entire marketing funnel from creating awareness to driving consideration and conversion for the brands.

    • Honasa Consumer Limited has strategically built an asset-light scalable business model by developing in-house capabilities for strategic functions such as technology, product innovation and marketing while outsourcing other operations such as manufacturing, as indicated by the restated profit before tax of ₹22.44 crores and ₹9.13 crores, and our invested capital in business of ₹81.21 crores and ₹91.24 million, for the Financial Year 2022 and the six months period ended September 30, 2022, respectively

     

    Honasa Consumer Limited (Mamaearth) IPO Risk Factors:

    • Honasa Consumer Limited’s brand reputation may be adversely affected in many ways. For example, any failure by its contract manufacturers to comply with their contractual obligations, including maintenance of requisite licenses and approvals, the quality control and assurance standards; retail of counterfeit products in the market; and unsatisfactory customer service could adversely impact the brand reputation of the company and subject it to additional risks and scrutiny, which could have an adverse effect on the business, financial condition, cash flows and results of operations.

    • The launch of new brands or products that prove to be unsuccessful could affect the growth plans which could adversely affect the business, financial condition, cash flows and results of operations.

    • Honasa Consumer Limited outsources the manufacturing of all the products to third-party manufacturers, primarily under non-exclusive contract manufacturing arrangements, and does not own any manufacturing facilities. The company’s dependence on third-party manufacturers for all the products subjects it to risks, which, if realized, could adversely affect the business, results of operations, cash flows and financial condition

    • any deterioration in Honasa Consumer Limited’s relationship with its celebrities and influencer network or damage to the reputation of such influencers or celebrities; the company’s relationships with influencers may not always include contractual commitments to continue to be supportive of the brands or products, and there can be no assurance that they will continue to do so

    • Honasa Consumer Limited is dependent on several third party service providers to sell or distribute its products to consumers, and on third party technology providers for certain aspects of its operations. Any disruptions or inefficiencies in these operations may adversely affect the business, financial condition, cash flows, and results of operations

    • Honasa Consumer Limited faces intense competition which may lead to a reduction in its market share, cause it to increase its expenditure on marketing and promotion as well as cause it to offer discounts, which may result in an adverse effect on the business and a decline in its profitability.

    • Honasa Consumer Limited may not be able to successfully identify and conclude acquisitions, or manage the integration of or harness synergies from acquired businesses, or the performance of such acquired businesses may be below the company’s expectations, any of which may adversely affect the business, results of operations, cash flows, and financial condition.

    Objects of the Offer:

    Honasa Consumer Limited proposes to utilize the Net Proceeds towards funding the following objects:

    • Advertisement expenses towards enhancing the awareness and visibility of the brands
    • Capital expenditure to be incurred by the Company for setting up new EBOs
    • Investment in the Subsidiary, Bhabani Blunt Hairdressing Private Limited (“BBlunt”) for setting up new salons
    • General corporate purposes and unidentified inorganic acquisition

     

    Honasa Consumer Limited (Mamaearth) IPO Prospectus:

    • Honasa Consumer Limited (Mamaearth) IPO DRHP –
    • Honasa Consumer Limited (Mamaearth) IPO RHP –

    Registrar to the offer:

    KFin Technologies Limited

    Telephone: +91 40 6716 2222

    E-mail: hcl.ipo@kfintech.com

    Website: www.kfintech.com

    Investor grievance e-mail: einward.ris@kfintech.com

    Contact person: M Murali Krishna

    SEBI registration no.: INR000000221