HONASA CONSUMER IPO

• Honasa Consumer, launched in 2016, is a Beauty and Personal Care (BPC)

company with a 29 per cent market share in the direct-to-consumer
segment and a 2 per cent share in the overall BPC segment.
• It houses some famous brands such as Mamaearth, Derma, Aqualogica, and
more. The company's product offerings include baby care, face care, body
care, hair care, and more.
• Overview : It is raising money for marketing and for investment in
new exclusive business outlets and to invest in its subsidiary. The
company looks to ride the growth in the BPC segment in India.
 HONASA CONSUMER IPO

• Quality : The company has inconsistent profits combined with a low return
on capital. Growth : The company's revenue has grown at 80 per cent per
annum in FY21-23.
• Valuation : The stock will be priced at a P/B of 10.454 times respectively,
compared to its peers' average P/B of 17.4 times, respectively. P/E is not
applicable due to negative earnings.
IPO details

Total IPO size (Rs cr) 1701.44

Offer for sale (Rs cr) 1336.44
Fresh issue (Rs cr) 365
Price band (Rs) 308-324
Subscription dates Oct 31 to Nov 2, 2023
Purpose of issue Advertisement, capex on new EBOs, and
investment in subsidiary
Post-IPO

M-cap (Rs cr) 10425

Net worth (Rs cr) 1003
Promoter holding (%) 35.3
Price/earnings ratio (P/E) -
Price/book ratio (P/B) 10.4
Financials

Key financials 2Y CAGR (%) TTM FY23 FY22 FY21

Revenue (Rs 80.14369 1644.99 1492.748 943.465 459.99
cr)
EBIT (Rs cr) -95.9416 37.868 -2.2 4.564 -1335.745
PAT (Rs cr) -67.2591 -107.55 -142.81 15.72 -1332.22
Net worth (Rs 638.263 605.901 705.624 -1765.143
cr)

Total Debt 68 92.19 59.629 1974.33

EBIT is earnings before interest and taxes

PAT is profit after taxes
KEY RATIOS

3Y average
Ratios (%) TTM FY23 FY22 FY21
ROE (%) - -18 -23 - -
ROCE (%) - 5.7 -0.3 - -
EBIT margin -96.7 2.3 -0.1 0.5 -290.4
(%)
Debt-to-equity 0.1 0.2 0.1 -1.1

ROE is return on equity

ROCE is return on capital employed
 HONASA CONSUMER IPO
• Strength of Honasa Consumer:
• Strong brand presence: The company houses some of the most well-
known brands in the beauty and personal care industry, such as
Mamaearth, Derma, Aqualogica, and more.
• Strong online presence: While it has an omnichannel network, most
of its business is conducted online. This makes the company
relatively asset-light, too.
 HONASA CONSUMER IPO
• Weaknesses of of Honasa Consumer:
• Reliance on marketing: The company highly depends on high marketing costs
in order to be visible among its peers. While, on average, advertising already
accounts for 39 per cent of revenue, it cannot afford to bring it down in the
future either.
• Inconsistent financials: While the company's top-line growth has been
impressive, it has been recurring losses and has inconsistent cash flows, which
also affects its return on capital.
• Competitive environment: The company shares its consumer base with many
established players with huge market share, causing them to always maintain
a huge expenditure in promotion and marketing