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Mamaearth's IPO Plans on Hold Amidst Weak Market Conditions and SEBI Approval

Indian Beauty Unicorn Mamaearth Takes "Wait and Watch" Approach for IPO Amid Banking Crisis

27 March 2023


Kunal Tyagi

India produced 3X more unicorns than China in 2022.png
  • Unicorn Indian D2C beauty e-commerce A sluggish market has forced Mamaearth to postpone its first public offering.

  • The business is now discussing its DRHP with SEBI while waiting for formal permission.

  • With a stand-alone net profit of INR 19.8 Cr, Mamaearth achieved profitability in FY22.

Unicorn Indian D2C beauty e-commerce According to reports, Mamaearth has postponed its initial public offering (IPO) because of sluggish market circumstances. Given the ongoing volatility in the global stock market, people with knowledge of the development told Reuters that Mamaearth is currently in a "wait and watch mode." The stock market's mood has been further impacted by the recent financial crises in the US and Europe.

To be clear, Mamaearth stated that it was still talking to SEBI about its DRHP and was waiting for formal permission. Upon approval, we will have 12 months, by the requirements, to file an RHP and float the business, which we will do after consulting with our bankers.

Varun Alagh and Ghazal Alagh, a husband-and-wife team that created Mamaearth in 2016, began the company's life as a D2C business by selling infant care items. It gradually entered the personal care market and today offers cosmetics, hair care, and beauty items. Now, the firm ships its goods to more than 500 locations throughout the nation. Bollywood actress Shilpa Shetty Kundra, Stellaris Venture Partners, the founder of Snapdeal, Kunal Bahl, and others have all backed Mamaearth.

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The firm has been forced to put the listing proposal on hold, according to a Reuters report, due to valuation disagreements between the company and possible investors and unfavorable market circumstances. During the public offering, the business hoped to generate $200 million to $300 million. Mamaearth stated that the corporation is not focused on short-term values and that pricing and valuations would be discovered as part of marketing roadshows.

Mamaearth was recently valued privately at about $1.3 billion. However soon after it submitted the DRHP to SEBI, several social media articles claimed that the unicorn was looking for a valuation of $3 Bn, which sparked heated discussions over its sales and profits. Mamaearth refuted the rumors at the time, stating that neither it nor its affiliates had cited or subscribed to the valuation figures reported in the social media posts.

By making a solo net profit of INR 19.8 Cr as opposed to a net loss of INR 1,332.2 Cr in FY21, the unicorn became profitable in FY22. In FY22, Mamaearth had a two-fold increase in revenue to Rs 943 crore, but around the same time, its profit fell by 50% to Rs 14.4 crore. According to DRHP documents submitted to SEBI, the business also reported an operating income of Rs 722 crore for the first half of FY23 (H1 FY23). The corporation is likely to exceed FY22 sales statistics in the current fiscal year if things continue this way.

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