Introduction:
The primary market has been a hotbed of activity recently with a slew of companies from various sectors going public to raise capital and offer opportunities for eager investors. One such Initial Public Offering (IPO) that has garnered significant attention is Honasa Consumer IPO.
This article explores the details of this highly anticipated IPO, from the issuing company’s background, financials, IPO listing date, lot size, price band, and more.
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About Honasa Consumer Limited
Honasa Consumer Limited was founded in 2016 by the husband-wife duo of Varun and Gazal Alagh. It is an Indian consumer goods company that provides beauty and personal care products through digital platforms and retail outlets nationwide. It is the parent company of several well-known brands, including Mamaearth, Aqualogica, The Derma Co., Dr. Sheth’s, and Ayuga.
As per the RedSeer report, Honasa Consumer Limited was the largest Indian company selling direct-to-consumer beauty and personal care products in terms of revenue. The company’s product offerings, as of 30 June 2023, include baby care, face care, body care, hair care, fragrances, and colour cosmetics.
The company has recently acquired stakes in Bhabani Blunt Hairdressing Private Limited (BBLUNT) and Momsspresso, a content platform.
Key Strengths of the Company
Below are the key strengths of Honasa Consumer Limited as stated in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI):
- Ability to leverage the power of digital marketing to reach a broad and engaged audience
- Commitment to producing products with natural and eco-friendly ingredients
- A track record of successful expansion of product portfolio from baby care to skin care, hair care, and more
- Attracts new generation through sustainable and responsible practices towards a green environment
- Known for its brand-building capabilities through data-driven contextualized marketing
- A market leader in providing natural onion and ubtan-based beauty products
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Key Weaknesses or Risks Highlighted
The key risks or weaknesses associated with Honasa Consumer Limited include:
- Failing to identify and adapt to changing consumer preferences may lead to a decline in business
- The strategy of launching new products may not work all the time
- The company derives a significant portion of its revenue from the sale of selected products
- It doesn’t have its own manufacturing unit and relies completely on third-party manufacturers
- Advertising eats up a considerable chunk of the revenue, impacting the profit margin
- Despite an impressive growth in terms of revenues, the company has incurred recurring losses
- Operates in a highly competitive industry that already has many established players
Key Financials of the Company
Assessing the core financials of a company can provide you with an idea of its future growth potential. The table below portrays the key financials of Honasa Consumer Ltd. for the last three years. All details are as per the company’s RHP on the SEBI website dated 23 October 2023:
| Particulars |
For Period Ended June 30, 2023 |
As of and for FY Ended March 31 |
| 2023 |
2022 |
2021 |
| Share Capital |
136 |
136 |
0.1 |
0.1 |
| Net Worth |
638 |
606 |
706 |
-1765 |
| Total Borrowings |
7 |
4 |
4 |
1954 |
| Revenue From Operations |
464 |
1493 |
943 |
460 |
| EBITDA Adjusted |
35 |
51 |
30 |
31 |
| Profit After Tax |
25 |
-151 |
14 |
-1332 |
| Earnings Per Share (Diluted) |
0.85 |
-5 |
1 |
-98 |
| Return on Equity (%) |
4.07 |
-24 |
2% |
- |
*Amount in Crores
The key points you can conclude from the table are:
- The financials of the company are highly inconsistent
- Revenue has grown robustly between FY21 and FY23
- The profits and net worth have remained erratic
- The ROE for FY23 is in the negative
Details of the IPO
Honasa Consumer IPO opens for public subscription on Tuesday, 31 October and closes on Thursday, 2 November 2023. The IPO comprises an offer for sale worth Rs. 1,336.44 crores and a fresh issue worth Rs. 365 crores. The price band has been fixed at Rs. 308 to Rs. 324 per share.
The objectives of the IPO include:
- Fund advertisement expenses
- Set up new brand outlets
- Invest in the recently acquired subsidiary BBLUNT
Other details of the IPO are mentioned in the table below:
| IPO Date |
31 October to 2 November 2023 |
| Basis of Allotment |
07-Nov-23 |
| Listing Date |
10-Nov-23 |
| Face Value |
Rs. 10 per share |
| Price Band |
Rs. 308 to Rs. 324 |
| Lot Size |
46 shares |
| Total Issue Size |
Rs. 1,701.44 crores |
| Offer for Sale |
Rs. 1,336.44 crores |
| Fresh Issue |
Rs. 365 crores |
| Issue Type |
Book Built Issue |
| Listing At |
NSE, BSE |
To conclude
Considering the inconsistent financials of Honasa Consumer Ltd., you should exercise caution while investing in its IPO. You should also analyse industry dynamics, strengths, risks, and other aspects of the company to make an informed investing decision.
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