All You Need to Know About the Honasa Consumer Ltd IPO

Honasa Consumer Limited is India’s largest digital-first beauty and personal care (“BPC”) firm in revenue from operations for the Fiscal Year 2022. Since its inception, the company’s main focus has been creating items that solve consumer issues with personal care and beauty. In 2016, married couple Varun Alagh and Ghazal Alagh established The Honasa Consumer Private Ltd. Today. Their business also owns well-known brands, including BBlunt, The Derma Co., and Mamaearth.

For instance, the company’s flagship brand, Mamaearth, focuses on creating toxin-free beauty products using natural components to meet a primary client need for safe-to-use products. Mamaearth, which reached a yearly turnover of Rs. 10 billion in the previous 12 months within six years of introduction, has emerged as the fastest-growing BPC brand in India as of September 30, 2022, according to the RedSeer Report.

Despite the secondary market’s turbulence, the initial public offering (IPO) market continues to see new offerings. Honasa Consumer, the parent company of Mamaearth, is the newest player in the IPO market. Honasa Consumer has submitted its Draft Red Herring Prospectus (DRHP) to the market regulator Securities and Exchange Board of India (SEBI), to raise money by publicly listing shares. The business, which sells baby, skin, body, and hair care products, will raise money by combining a new equity share issuance with an offering for sale (OFS).

Company Overview

The Honasa Consumer Limited incorporation date is only 2016. But in just a few short years, the business has become the nation’s biggest personal and beauty care brand. In terms of operating revenue during FY22, the company held a commanding lead, easily outpacing more powerful competitors.

According to the Draft Red Herring Prospectus submitted by Honasa Consumer Ltd, the company’s primary strengths are its capacity to create powerful brands, high-volume sales playbooks, an approach to product innovation that is customer-centric, a robust omnichannel distribution infrastructure that prioritises the digital-first, data analytics-driven contextual marketing, highly competent management group headed by the founders and the capacity to increase and profit while using money effectively.

The company has several brands, with Mamaearth as the top tier and flagship. As a brand, Mamaearth creates a variety of items for various markets. One of their selling points is that Mamaearth’s products are manufactured with natural materials, devoid of pollutants, and fully safe to use. While Mamaearth was created from scratch, Honasa Consumer Limited has also purchased other well-known brands to improve its position in the market, including major brands, including Ayuga, Aqualogica, BBlunt, and Dr Sheth’s, and The Derma Co. The corporation has successfully created a “House of Brands” through these purchases. Honasa Consumer Limited’s portfolio includes brands that appeal to industries like cosmetics, baby care, hair care, face care, body care, and more as of September 30, 2022.

Company Financials

Honasa Consumer Limited increased its operating revenue during the Financial Years 2020 and 2022, from Rs. 109.78 crores in FY2020 to Rs. 943.46 crores in FY2022, at a CAGR of 193.15%, according to a RedSeer analysis. As of September 30, 2022, Mamaearth has emerged as the BPC brand in India with the quickest growth rate, having done so within six years of introduction to reach an annual revenue of Rs. 1 billion crores.

The Securities and Exchange Board of India has received a Draught Red Herring Prospectus (DRHP) from Delhi-based Honasa Consumer Limited for an initial public IPO (IPO) of Rs. 400 crores 46,819,635 equity shares on December 21, 2022. The offer consists of a new Rs. 400 billion issue and an offer for the sale of 46,819,635 equity shares by the promoters listed in the DRHP. Pre-IPO placement of up to Rs. 80 crores is requested for this issue. They are now awaiting approval from the Securities and Exchange Board of India to launch the IPO in the market.

According to the DRHP submitted by the company, the net proceeds will be used for setting up Exclusive Brand Outlets (EBOs), opening new salons under the BBlunt (Bhabani Blunt Hairdressing Private Limited) brand, future unspecified inorganic acquisitions, and other general corporate purposes. The company’s various brands and products will be marketed and advertised to raise awareness and improve visibility.

7 Important Things to Know About Keventer Agro Ltd IPO

  • Keventer Agro Ltd. has registered with SEBI for an initial public offering (IPO) of Rs. 800 crore, which includes a new issue of Rs. 350 crore and an offer for the sale of OFS worth Rs. 450 crore. In addition, 15.35 million mandatorily convertible preference shares (CCPS) will be transformed into 9.15 million firm shares as part of the IPO.
  • Let’s first examine the OFS part of the Rs. 800 crore issue. 1,07,67,664 shares worth about Rs. 450 crores would be sold in the OFS. Only when the IPO price band is revealed will the Keventer Agro IPO’s ultimate valuation be known. Mandala of Singapore, which owns 6.16% of Keventer, will be among the main early investors to leave Keventer Agro.
  • Keventer Agro Ltd is set to use Rs. 155 crores of the new issue proceeds for debt repayment or prepayment, while Rs. 111 crore of the new issue proceeds will be used for capital expenditures. Fast-moving consumer goods (FMCG) comprise most of the company’s business, and its shares carry a face value of Rs. 5 each.
  • The business is considering a pre-IPO placing of Rs. 50 crore in addition to the IPO, resulting in a smaller IPO. A combined effect of the fresh issuance and the OFS will likely cause the promoters’ current 80% ownership in the company—which they now own—to fall to 70% after the IPO.
  • The eastern states of West Bengal, Jharkhand, Odisha and Bihar are where Keventers products are mostly distributed. Assam, Sikkim, Arunachal Pradesh, Nagaland, Tripura and Meghalaya are some of the other North Eastern states where it has a significant franchise. Also, it is currently spreading to other regions of India.
  • In the markets for dairy products, packaged goods, and fresh foods in East India, Keventer Agro stands as a significant player. Almost 90 SKUs are available here. Frooti, Appy, Appy Fizz, and Bailey are just a few well-known brands Parle Agro has licensed. Moreover, the firm sells milkshakes, frozen goods, UHT milk, and bananas under the Keventer brand.
  • As we discussed before, Axis Capital, ICICI Securities, and JM Financial will manage Keventer Agro Ltd’s first public offering (IPO). They will serve as the issue’s book-running lead managers or BRLMs.

Conclusion

Honasa Consumer Limited is daring to launch its IPO in such a situation, given the long winter that tech stocks have been experiencing both internationally and in India. The Mamaearth IPO valuation is high, and the company has never consistently been profitable. 

However, the rising income levels increased digital adoption, and expanding India’s beauty and personal care market may provide the business with significant future growth potential. The impending IPO of Honasa Consumer Limited is likely to be well received based on the response to similar IPOs from the personal care and beauty industries. 

Nonetheless, the price range that the company chooses to set for the IPO will ultimately determine how the public will react.

 

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