Mamaearth to utilise IPO funds to increase marketing and offline presence; details here

Honasa Consumer, the parent company of direct-to-consumer beauty and personal care business Mamaearth, intends to fund marketing campaigns and increase its offline presence across important brands with the funds raised from its Rs 2,900-crore initial public offering (IPO). The proceeds will be used for general corporate purposes, unspecified inorganic acquisitions, capital expenditures for the new Exclusive Brands Boutique (EBO) and new salons by investment company subsidiary BBlunt (Bhabani Blunt Hairdressing), as well as advertising costs to raise brand awareness and recognition.

As revealed in the company’s DRHP (Draft Red Herring Prospectus), it plans to invest Rs 186 crore of the net proceeds in marketing initiatives over the course of the upcoming four years. By combining mall and high street shops, Honasa intends to open 132 new EBOs throughout India by FY2026 and intends to invest Rs 34.2 crore in expansion.

Additionally, the business planned to put Rs 27.5 crore of the net profits in BBlunt in order to help it create 20 new salons by 2026. There are nine Blunt salons spread throughout India as of 30 September 2022. Furthermore, no more than 35 percent of the net funds may be utilised for general business functions and unspecified inorganic purchases. A maximum of 25 percent of net proceeds may be used for general company purposes alone.

Along with Mamaearth, Honasa also owns the following five brands: The Derma Company, Aqualogica, Ayuga, Dr Sheth, and BBlunt. The firm had in capital expenditure of Rs 52 lakh for FY2022 and Rs. 1.4 crore for the six months ended 30 September 2022, respectively, comprising 0.06 percent and 0.19 percent of operational revenue for Honasa for the same term.

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The market for personal care and beauty products in India is predicted to increase from about $17 billion in 2021 to around $30 billion by 2026, at a CAGR of nearly 12 percent. Honasa reported a profit of Rs 19.86 crore for the fiscal year that ended 31 March 2022, compared to reported losses of Rs 1,332 crore for FY21 and Rs 428 crore for the fiscal year that concluded in March 2020. The company’s operating income saw a significant surge, from Rs 109 crore in FY20 to Rs 943 crore in FY21. Revenue for the first half of 2022 concluded at Rs 723 crore on 30 September.

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