L to R: Jayasankar Venkataraman (Managing Director and Member of the Board Kotak Mahindra Capital Company), Abhinav Bharti (Managing Director, Head of India ECM, J.P. Morgan India Pvt Ltd), Raman Preet Sohi (CFO, Honasa Consumer Ltd.), Varun Alagh (Chairman, Wholetime Director and CEO, Honasa Consumer Ltd.), Ghazal Alagh (Wholetime Director and Chief Innovation Officer, Honasa Consumer Ltd.), Cheryl Netto (Deputy Chief Executive Officer, JM Financial) and Rahul Saraf (Managing Director, Head of India Investment Banking, Citigroup Global Markets India Private Limited) at the IPO conference of Honasa Consumer Ltd.
Honasa Consumer Limited (“HCL” or the “Company”), proposes to open on Tuesday, October 31, 2023, an initial public offer of equity shares of face value of ₹10 each (“equity shares”) of Honasa Consumer Limited (“Company” or “Issuer”).
The company has turnaround in the Q1-FY 2024 reporting net profit of Rs. 24.71 crore against Rs. 11. 52 crores in Q1-FY 2023 and FY 2023 net loss of Rs. 151 crores.
The gross profit margin of 17.03 % in Q1-FY 2024 allows a high profit poll to leverage as cost efficiency set in. The company is on the cusp of increase in profitability trajectory with business model efficiency and operating leverage setting in.
The total offer size comprises of fresh issue aggregating up to ₹ 365 crore Equity Shares and Offer for Sale (OFS) of up to 41,248,162 Equity Shares by Selling Shareholders. (“The Total Offer Size”). Those offering shares in the OFS include promoters and founders — Varun Alagh and Ghazal Alagh — and investors like Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, Rishabh Harsh Mariwala and Bollywood actor Shilpa Shetty Kundra.
The Offer will close on Thursday, November 2, 2023.
The Price Band of the Offer has been fixed at ₹ 308 to ₹ 324 per Equity Share. Bids can be made for a minimum of 46 Equity Shares and in multiples of 46 Equity Shares thereafter. Discount of ₹ 30 per equity share is being offered to eligible employees bidding in the employee reservation portion
The Company, as part of the Objects of the Offer, proposes to utilize the Net Proceeds raised through the Fresh Issue towards (i) Advertisement expenses towards enhancing the awareness and visibility of brands, (ii) Capital expenditure to be incurred by Company for setting up new EBOs, (iii) Investment in its Subsidiary, Bhabani Blunt Hairdressing Private Limited (“BBlunt”) for setting up new salons; and (iv) General corporate purposes and unidentified inorganic acquisition. (Collectively, the “Objects”).
Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited and J.P. Morgan India Private Limited are the Book Running Lead Managers to the offer.
About The Company:
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 2023 (Source: RedSeer Report). Since its inception, Honasa Consumer has worked with the primary objective of developing products that address beauty and personal care problems faced by consumers. 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 the Financial Year 2023, 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, Honasa has added five new brands to its portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, and have built a ‘House of Brands’ architecture. As of June 30, 2023, 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.
As per RedSeer Report, Honasa Consumer is the largest company in the DTC BPC market in India in terms of revenue generated from the DTC channel in Financial Year 2023. Its brand Mamaearth was ranked amongst the top three in terms of awareness in the grooming category on Flipkart between May 2021 and July 2023 and Mamaearth was India’s most-searched BPC brand on Google Trends between January 2020 and June 2023.
The Company makes products available to customers through Omni-channel distribution networks across both online and offline touchpoints. Its modern trade channel includes a network of 31 retail chains, as of June 30, 2023, with whom it has contractual arrangements for the sale of products. These retail chains include national retail chains, regional retail chains, pharmacies, and cash-and-carry stores across India. For the period of July 2023, the Company is estimated to have retailed products through 154,447 FMCG retail outlets in India. Its offline channel consists of general trade channels and modern trade retail channels, and is supplemented by 85 EBOs across India as of June 30, 2023. The Company accesses this channel through its network of distributors, super distributors and sub-stockiest (total of 220 by FY23).
Honasa continuously seek to connect better with its consumers and strengthen its brand equity by building ‘purpose driven’ brands that are associated with environmental and social impact causes. Through the Mamaearth ‘Plant Goodness’ initiative, company work with a non-government organisation to plant trees for orders placed on its direct-to-consumer (“DTC”) platform and share geo-tagged images of these trees with its consumers. Similarly, The Derma Co. is associated with a ‘Young Scientists’ program wherein children in certain rural parts of India are provided with access to education in science, and Aqualogica is associated with a ‘Fresh Water for All’ initiative wherein company help enable access to clean drinking water for marginalized communities.