Mama Earth IPO : The disaster for the new a Golden exit for investors

Overview of Honasa Consumer Limited (MAMA EARTH )

Honasa Consumer Limited (HCL), founded in 2016, is a digital-first company that sells beauty and personal care products. It is based on the values of honesty, natural ingredients, and safe care. Mama Earth serves over 500 cities in India and has grown its own brands internally, including Mama earth, The Derma Co., Aqualogica, Dr. Sheth’s, and Ayuga. It has also acquired shares in BBLUNT and Momspresso. HCL is backed by Sequoia Capital India, Sofina SA, Fireside Ventures, and Stellaris Venture Partners, and is poised to become a $1 billion company.

As of June 30, 2023, HCL’s product portfolio includes baby care, face care, body care, hair care, color cosmetics, and fragrances. HCL’s core strengths are its ability to build innovative products and its multiple distribution channels, which allow it to cater to customers’ needs both online and offline.

Mama earth IPO’s Financial Information

Period Ended	31 Mar 2021	31 Mar 2022	31 Mar 2023	30 Jun 2023
Assets	302.64	1,035.01	966.42	1,048.03
Revenue	472.10	964.35	1,515.27	477.10
Profit After Tax	-1,324.61	14.44	-150.97	24.72
Net Worth	-1,765.14	705.62	605.90	638.26
Reserves and Surplus		-1,087.33	-1,323.32	-1,290.94
Total Borrowing		3.59	3.61	6.79

Objects of the Issue

he company proposes to utilize the Net Proceeds from the IPO towards funding the following objects:

• Advertisement expenses towards enhancing the awareness and visibility of the company’s brands: This will help the company to reach more potential customers and increase its brand recognition.
• Capital expenditure to be incurred by the Company for setting up new EBOs: EBOs or exclusive brand outlets are a key part of the company’s distribution strategy. Setting up new EBOs will help the company to expand its reach and make its products more accessible to customers.
• Investment in the company’s Subsidiary, Bhabani Blunt Hairdressing Private Limited (“BBlunt”) for setting up new salons: BBlunt is a leading hairdressing brand in India. Investing in BBlunt will help the company to expand its product portfolio and reach a wider range of customers.
• General corporate purposes and unidentified inorganic acquisition: This includes a variety of potential uses, such as working capital, research and development, and acquisitions. By leaving some of the proceeds for general corporate purposes, the company has the flexibility to use the funds as needed to support its growth and development.

Overall, the company’s proposed use of the Net Proceeds from the IPO is well-aligned with its growth strategy. Investing in advertising, expanding its distribution network, and acquiring complementary businesses will help the company to grow its market share and become a leading player in the beauty and personal care industry.

Mamaearth IPO Review(Must AVOID)

Mama Earth: A High P/E, Low Profit Margin Company with Lack of Customer Retention

Mama Earth is a popular brand of eco-friendly cosmetics and creams, but it is not without its critics. One of the biggest criticisms of Mama Earth is its high P/E ratio. A P/E ratio, or price-to-earnings ratio, is a measure of how much investors are willing to pay for each dollar of a company’s earnings. Mama Earth’s P/E ratio is currently over 100, which is significantly higher than the average P/E ratio for companies in the beauty and personal care industry.

Another major concern is Mama Earth’s low profit margin. A profit margin is the percentage of revenue that a company keeps after paying all of its expenses. Mama Earth’s profit margin is currently less than 10%, which is very low for a company in the beauty and personal care industry.

Finally, Mama Earth has also been criticized for its lack of customer retention. Customer retention is the percentage of customers who continue to buy a company’s products or services over time. Mama Earth’s customer retention rate is currently below the average for companies in the beauty and personal care industry.

These three factors – high P/E ratio, low profit margin, and lack of customer retention – suggest that Mama Earth is not a good investment. Investors should be wary of investing in a company with such high valuation and low profitability.

In addition to the above, here are some other potential downsides of investing in Mama Earth:

• The company is relatively new and has a short track record.
• The beauty and personal care industry is highly competitive.
• Mama Earth’s products are relatively expensive.
• The company faces increasing competition from private labels and international brands.

Overall, Mama Earth is a risky investment. Investors should carefully consider the factors above before investing in the company.

Mamaearth IPO Subscription Status

Summary of the Mamaearth IPO subscription status on Nov 1, 2023 3:44:00 PM (Day 2) in bullet points:

• Overall subscription: 0.68 times
• Retail category subscription: 0.57 times
• QIB category subscription: 1.02 times
• NII category subscription: 0.07 times

Check Day by Day Subscription Details (Live Status)

MAMA EARTH IPO’s GMP

• Grey Market Premium (GMP): ₹6
• Price band: ₹308-324
• Estimated listing price: ₹330 (cap price + GMP)
• Expected percentage gain/loss per share: 1.85%

Retail and Small HNI Subject to Sauda prices:

• Retail Subject to Sauda: ₹200
• Small HNI Subject to Sauda: ₹2800

Check Day by Day GMP Details (Live Status)

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