The shares of Honasa Consumer, which owns the beauty and personal care brand Mamaearth, saw a muted debut on the Indian stock exchanges with just over a 2 per cent premium on Tuesday. Honasa Consumer has listed at Rs 333 per share, against the IPO issue price of Rs 324. At the time of filing this report, it was at Rs 331.
“While Honasa Consumer is still a relatively young company, it has quickly grown to become a major player in the Indian BPC market…However, the financial condition of the company is facing some turbulence, and there are other operation-related risks as well,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd. “Despite the premium valuation, the IPO received a positive response from investors. This is likely due to the company’s strong brand recognition, diversified product portfolio, and pan-India presence,” Nyati added.
“After receiving a decent subscription, stock was able to give a positive listing. Investors are now suggested to book profit and exit their position.” Shares of Honasa Consumer were fully subscribed on Day 3 of its initial public offering on November 2. Data showed the company’s public issue was subscribed over 7 times, with retail investors at 1.13 times, non-institutional buyers 3.94 times, and qualified institutions at 11.50 times.
The public issue of the company, which didn’t see much traction in the first two days, was fully booked on the third day. The IPO included a fresh equity issue of Rs 365 crore and an offer for sale of about 4.12 crore shares.
Under the OFS, founders Varun Alagh and Ghazal Alagh along with investors Kunal Bahl, Shilpa Shetty, and Rishabh Mariwala offloaded their partial stakes. The company operates six brands — Mamaearth, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s.
Its product portfolio includes products in the baby care, face care, body care, hair care, colour cosmetics and fragrances segments. Mamaearth is however, the flagship brand, generating the highest revenue.
It told the market regulator SEBI in its draft red herring prospectus that the money from the listing would be used for advertising costs, capital expenditures to open new stores exclusively for its brands, investments in its subsidiary BBlunt to open new salons, general corporate purposes, and “unidentified” inorganic acquisitions.