Flat Listing: Parent company of Mamaearth, Honasa Consumer debuts at Rs 324 each on the BSE

Honasa Consumer Limited, the parent company of Mamaearth, which operates a digital platform offering a range of beauty and personal care products, made its debut on the Indian stock market today.

Upon its debut on the BSE, the stock opened at Rs 324 per share, remaining flat compared to the issue price. In contrast, on the NSE, the stock began trading at Rs 330 per share, indicating a 1.9% increase over its initial public offering price of Rs 324 per share.

As of the current moment, the stock is being traded at Rs 331.95 per share on the BSE, having reached intraday highs and lows of Rs 334.85 and Rs 324, respectively. The present market capitalisation of the company stands at Rs 10,680 crore.

The book-running lead managers for the IPO are Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, JM Financial Limited, and JP Morgan India Private Limited. Additionally, Kfin Technologies Limited serves as the registrar for the issue.

IPO Proceeds 

The company’s plan for utilising the Net Proceeds involves several key objectives. Firstly, a portion of the funds will be directed towards bolstering brand awareness and visibility through increased advertising expenses. Additionally, the company will allocate resources to finance capital expenditures aimed at establishing new Exclusive Brand Outlets (EBOs). Another strategic move includes investments in its subsidiary, Bhabani Blunt Hairdressing Private Limited (“BBlunt”), to facilitate the expansion of new salons. Lastly, the company will also earmark funds for general corporate purposes and potentially seize opportunities for unidentified inorganic acquisitions, as part of its overall growth and development strategy.

Company profile

Honasa Consumer Limited (HCL) operates a digital platform, offering a range of beauty and personal care products. It was incorporated in 2016. HCL’s foundation is rooted in the principles of honesty, natural ingredients, and safe care, and it presently serves more than 500 cities across India. Internally, the company has developed various consumer brands, such as Mamaearth, The Derma Co., Aqualogica, Dr. Sheth’s, and Ayuga.

Additionally, the company has recently acquired stakes in BBLUNT and the Momspresso content platform. With backing from prominent investors like Sequoia Capital India, Sofina SA, Fireside Ventures, and Stellaris Venture Partners, HCL is on track to reach a valuation of USD 1 billion. As of June 30, 2023, the company’s product range encompasses baby care, facial care, body care, hair care, cosmetics, and fragrances.

Subscription details 

On November 2, 2023, the final day of the IPO window, the IPO witnessed a moderate response, especially when compared to other IPOs recently listed, with a subscription rate of 7.61 times. The public issue received mixed interest, with the retail category being subscribed 1.35 times, the QIB category achieving a subscription rate of 11.50 times, and the NII category reaching a subscription rate of 4.02 times.

The company attracted Rs 765.20 crore from various anchor investors by allocating 2.36 crore equity shares at Rs 324 per share. The complete lock-in period for these anchor investors ends on March 15, 2024.

The IPO price range was set between Rs 308 and Rs 324, with a face value of Rs 10 per share and a lot size of 46 shares. The total size of the company’s IPO was Rs 1701.44 crore, and the final share issue price was fixed at Rs 324 each.

Financial Performance 

Conclusion 

The key dilemma for investors is whether to hold onto their shares. Those who applied for the IPO with the sole intention of capitalising on listing gains may be disappointed as the stock debuted flat in the market today. Consequently, some of these investors may consider closing their positions.

Conversely, investors with a higher risk tolerance might opt to hold onto their shares for the medium to long term, as this strategy could potentially yield benefits over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.