Mamaearth IPO Final Day: Issue subscribed 7.61 times, QIB portion booked 11.5 times

In a remarkable turn of events, the initial public offering (IPO) of Honasa Consumer, the parent company of the well-known brand Mamaearth, received an enormous reaction. Investors were eager to get in on the IPO, and on November 2, the last day of bidding, it was subscribed 7.61 times. The fact that bids were received for an astounding 22 crore shares versus the issue size of 2.89 crore shares is indicative of the sheer enthusiasm.

Credits: Money Control

Investor Categories

Honasa Consumer’s IPO drew significant interest from various investor categories, showcasing a diverse range of stakeholders.

Retail Investors: Retail investors, often considered the backbone of any stock market, subscribed 1.35 times the allocated quota. This demonstrates the trust and confidence that the average investor has in the company and its potential for growth.

High Net Worth Individuals (HNIs): High net worth individuals, who are typically known for their substantial investment capabilities, bought 4.02 times the allocated quota. Their involvement suggests that Honasa Consumer’s IPO is seen as a lucrative investment opportunity.

Qualified Institutional Buyers (QIBs): The most substantial response came from qualified institutional buyers, who subscribed a staggering 11.5 times the allotted quota. This signals that institutions and professional investors have strong faith in the company’s future prospects.

Employees: Employees, who had a special allocation of Rs 1 crore worth of shares reserved in the IPO, enthusiastically subscribed, buying 3.72 times the allocated quota. This highlights the alignment of interests between the company and its workforce, fostering a sense of ownership and participation.

Price Band and Allocations

The price range for each share in the IPO, which represented the company’s worth, was Rs 308–324. With 75% of the net issue size set aside for QIBs, 15% for HNIs, and the remaining 10% for retail investors, the allocations were designed to give opportunities to all investor types. To further encourage their participation, employees were also offered a special chance to invest in the company at a discount of Rs 30 per share to the final issue price.

Fund Utilization Plan

The funds raised through this IPO are significant, with Honasa Consumer aiming to raise Rs 1,701 crore. The IPO comprises a fresh issuance of shares worth Rs 365 crore and an offer-for-sale (OFS) of 4.13 crore equity shares by a few shareholders, including Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, and Shilpa Shetty Kundra.

Advertisement Expenses: A substantial portion of the net proceeds, Rs 182 crore, will be allocated to fund advertisement expenses. This reflects the company’s commitment to strengthening its brand presence and reaching out to a broader customer base.

Exclusive Brand Outlets (EBOs): Honasa Consumer plans to invest Rs 20.6 crore to set up new exclusive brand outlets (EBOs). This move signifies the company’s determination to create a strong offline retail presence, complementing its online success.

Investment in Subsidiary: Rs 26 crore will be invested in the company’s subsidiary, BBlunt, to set up new salons. This indicates diversification and expansion into related businesses to create additional revenue streams.

General Corporate Purposes: The remaining amount from the proceeds will be allocated to general corporate purposes and potentially unidentified inorganic acquisitions. This flexible allocation demonstrates Honasa Consumer’s preparedness for unforeseen opportunities and market dynamics.

About Honasa Consumer and Mamaearth

The parent company of Mamaearth, Honasa Consumer, is a direct-to-customer (D2C) company with its headquarters located in Gurugram that specializes in beauty and personal care products. The flagship brand, Mamaearth, has become incredibly well-known in the Indian market because of its dedication to producing natural and environmentally friendly goods. Established by Varun Alagh and Ghazal Alag, the business has established a reputation for itself by meeting the increasing need for chemical-free and safe skincare and haircare products. Mamaearth’s commitment to environmentally friendly and sustainable procedures has struck a chord with customers, resulting in the company’s quick expansion.