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Honasa Consumer’s initial public offering (IPO) closed on Thursday after being oversubscribed by 7.6 times. The company, which owns fast-moving consumer goods (FMCG) brands Mamaearth and The Derma Co, received bids for approximately 22 crore shares against an offer of around 2.89 crore shares. As part of the IPO, Honasa Consumer offered a fresh issue of up to ₹365 crore and an offer for sale (OFS) of up to 4,12,48,162 equity shares.
The investor categories showed varying levels of subscription. The non-institutional investors’ category was subscribed 4.01 times, retail individual investors (RIIs) saw a subscription rate of 1.31 times, and the quota for qualified institutional buyers (QIBs) was subscribed 11.50 times. The allotment is scheduled for November 7, with the listing expected on November 10.
Prominent investors in the IPO included Varun Alagh, Ghazal Alagh, Shilpa Shetty Kundra, Fireside Ventures Fund, Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, and Rishabh Harsh Mariwala. In the grey market, Honasa Consumer’s unlisted shares were priced ₹6 higher than its issue price, indicating a potential 1.85% listing gain.
The IPO was open from October 31 to November 2 and saw a subscription of 72% by day three with retail investors at 67%, NII at 15%, QIB booked 1.02 times, and employee portion subscribed 3.44 times. The price band was ₹308-324 per share with a face value of ₹10 each.
Brokerage firms had mixed views about the IPO due to a PE multiple of 97.59x annualising diluted EPS for Q1FY24 (₹0.83). The revenue compound annual growth rate (CAGR) for the period FY21-23 stood at about 80.14% with an EBITDA margin of 1.52% and a negative PAT margin for year ended FY23.
The proceeds from the IPO will be used for advertising costs, capital for new exclusive brand outlets (EBOs), financial support for new salons by its subsidiary BBlunt, general corporate objectives, and an unidentified inorganic acquisition. The company operates with a ‘House of Brands’ model and the offer was managed by Kotak Mahindra Capital Company, Citigroup Global Markets India, JM Financial, and J P Morgan India.
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