Mumbai, India – Honasa Consumer Limited (HCL), the parent company of Mamaearth, unveiled its initial public offering (IPO) subscription worth approximately ₹1,701 crore ($226 million) on Tuesday. Co-founded by Varun and Ghazal Alagh, the renowned beauty and personal care firm is ambitiously seeking a valuation of around ₹10,500 crore ($1.4 billion) at the upper end of the IPO price band. The IPO is slated to conclude on November 2, and shares are expected to commence trading on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on November 10, 2023.
HCL has set a price range for its IPO at ₹308-₹324 per share, offering investors the opportunity to apply for a minimum of 46 equity shares, with the option to purchase additional shares in multiples of 46. The IPO is designed to raise approximately ₹365 crore ($44 million) by issuing fresh equities and an additional ₹1,336 crore ($178 million) through an offer for sale (OFS) of 41,248,162 equity shares. Promoters Varun Alagh and Ghazal Alagh, alongside existing shareholders Rohit Kumar Bansal and Sofina Ventures, are planning to divest their stakes. Notably, Bollywood celebrities Shilpa Shetty Kundra and Kunal Bahl also have intentions to offload their shares.
The funds procured from the IPO will be strategically allocated towards advertisement and capital expenses, investments in its subsidiary Bhabani Blunt Hairdressing to establish new salons, and other general corporate purposes. Of the ₹365 crore raised from the fresh issue, HCL proposes to allocate ₹186 crore for advertisement expenses, ₹34.23 crore for capital expenditures in setting up new Exclusive Brand Outlets (EBOs), and ₹27.52 crore for investments in its subsidiary.
Despite posting a net loss of ₹151 crore ($20 million) in the fiscal year 2023, HCL managed to achieve a remarkable 58% increase in operating revenue, reaching ₹1,493 crore ($198 million) in FY23 compared to ₹943 crore ($125 million) the previous year. Total expenditure concurrently surged by 59.4% to ₹1,502 crore ($199 million) in FY23 from ₹942 crore ($125 million) in FY22.
In anticipation of the IPO launch, HCL raised ₹765.2 crore ($100 million) on Monday by allocating 2.36 crore equity shares at ₹324 per share to anchor investors. The anchor investors included seven domestic mutual funds and foreign portfolio investors (FPIs) such as Capital Group, Fidelity International Ltd, Norges Bank, and the Abu Dhabi Investment Authority. Additionally, prominent domestic investors like ICICI Prudential, Aditya Birla Sun Life, Nippon, Axis, Canara Robeco, Invesco, and White Oak participated in the offering. Several leading life insurance companies, including SBI Life Insurance, ICICI Life Insurance, Birla Life Insurance, Max Life Insurance, Bajaj Allianz Life Insurance, and Bharti AXA Life Insurance, were also part of the domestic investors.
