Mamaearth stock sees muted listing, opens at 1.8% premium
Honasa Consumer, the parent company of Mamaearth, saw a lukewarm debut on the stock market today (November 7). Its shares opened at Rs. 330 apiece on the NSE and Rs. 324 apiece on the BSE, just matching the upper end of the issue price of Rs. 324. Despite strong interest from qualified institutional bidders (QIB) who oversubscribed by 11.5 times, retail investors were more cautious, subscribing just 1.4 times their allotted quota.
Financial performance over the years
The company posted a net loss of Rs. 150.9 crore for the fiscal year ending March 2023, due to impairment losses on goodwill and other intangible assets, compared to a profit of Rs. 14.4 crore the previous year. Volume growth dropped significantly to 68.23% in FY23 from 143.3% in FY22 and 298.42% in FY21. However, revenue from operations increased at a CAGR of 80.14% between FY21 and FY23.
Who are the anchor investors?
Mamaearth's parent company drew the attention of prominent investors such as Smallcap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Government Pension Fund Global, Carmignac Portfolio, Goldman Sachs, and Hornbill Orchid India Fund. Retail investors, on the other hand, showed less enthusiasm for the IPO, as the portion reserved for them experienced weaker interest. At the time of writing, the shares traded at Rs. 333, up 2.78%, on NSE.
Should you buy or sell?
Prashanth Tapse of Mehta Equities told CNBC TV18, that conservative investors should book profits on the listing day and wait for better pricing after listing, while risk-takers could consider holding the stock long-term for potential high product growth. Anushi Vakharia of StoxBox advised investors who received shares to book profits, if any, on the listing day and reevaluate the company after consistent and sustainable improvements in profitability.
IPO details and company background
The IPO of Honasa Consumer was subscribed 7.6 times overall, with a price range of Rs. 308-324 per share and a lot size of 46 shares. The company plans to use the IPO proceeds for advertising expenses, capital expenditure for new exclusive brand outlets (EBOs), investment in its subsidiary BBlunt to open new salons, and general corporate purposes, including unidentified inorganic acquisitions. Honasa Consumer is the first direct-to-consumer (D2C) company to go public in India.
