Akash Jha
Introduction:
The primary market has recently been a hive of activity, with a spate of firms from diverse industries going public in order to generate funds and provide chances for interested investors. Honasa Consumer IPO is one such Initial Public Offering (IPO) that has received a lot of attention.
This article delves into the specifics of this highly anticipated IPO, including the background of the issuing company, financials, the IPO listing date, lot size, price band, and more.
About Honasa Consumer Limited
Varun and Gazal Alagh, a married couple, established Honasa Consumer Limited in 2016. A leading distributor of cosmetics and personal care items in India, the company operates both online and in brick-and-mortar stores. Famous companies including Mamaearth, Aqualogica, The Derma Co., Dr. Sheth’s, and Ayuga all fall under its umbrella.
RedSeer found that Honasa Consumer Limited, an Indian direct-to-consumer seller of cosmetics and personal care products, generated the most income in the country. As of 30 June 2023, the company sells products across a variety of categories, including those for babies, adults, and everyone in between.
Both Bhabani Blunt Hairdressing Private Limited (BBLUNT) and Momsspresso, a content platform, are recent investments for the firm.
Key Strengths of the Company
The following are Honasa Consumer Limited’s core strengths, as stated in its Draft Red Herring Prospectus (DRHP) submitted with the Securities and Exchange Board of India (SEBI):
Capability to use the power of digital marketing to reach a large and engaged audience
Commitment to producing products with natural and eco-friendly ingredients
A track record of successfully expanding product portfolios from baby care to skin care, hair care, and more.
Attracts new generations to a greener environment through sustainable and responsible behaviors.
It is well-known for its ability to establish brands through data-driven contextualized marketing.
A market leader in natural onion and ubtan-based beauty products.
Key Weaknesses or Risks Highlighted
The key risks or weaknesses associated with Honasa Consumer Limited include:
- Failure to recognize and respond to changing consumer tastes may result in a drop in sales.
- The strategy of launching new items may not always be successful.
- The sale of specific products contributes significantly to the company’s revenue.
- It does not have its own production facility and must rely entirely on third-party producers.
- Advertising consumes a significant portion of revenue, reducing profit margins.
- Despite remarkable revenue growth, the company has experienced recurring losses.
- operates in a very competitive business with numerous well-established players
Key Financials of the Company
Assessing the core financials of a company can provide you with an idea of its future growth potential. The table below portrays the key financials of Honasa Consumer Ltd. for the last three years. All details are as per the company’s RHP on the SEBI website dated 23 October 2023:
| Particulars | For Period Ended June 30, 2023 | As of and for FY Ended March 31 | ||
| 2023 | 2022 | 2021 | ||
| Share Capital | 136 | 136 | 0.1 | 0.1 |
| Net Worth | 638 | 606 | 706 | -1765 |
| Total Borrowings | 7 | 4 | 4 | 1954 |
| Revenue From Operations | 464 | 1493 | 943 | 460 |
| EBITDA Adjusted | 35 | 51 | 30 | 31 |
| Profit After Tax | 25 | -151 | 14 | -1332 |
| Earnings Per Share (Diluted) | 0.85 | -5 | 1 | -98 |
| Return on Equity (%) | 4.07 | -24 | 2% | – |
*Amount in Crores
The key points you can conclude from the table are:
- The financials of the company are highly inconsistent
- Revenue has grown robustly between FY21 and FY23
- The profits and net worth have remained erratic
- The ROE for FY23 is in the negative
Details of the IPO
Honasa Consumer IPO goes on sale to the public on Tuesday, October 31st, and ends on Thursday, November 2nd, 2023. The IPO consists of a public offering for Rs. 1,336.44 crores and a fresh issue worth Rs. 365 crores. The price range has been set at Rs. 308-324 per share.
The objectives of the IPO include:
- Fund advertisement expenses
- Set up new brand outlets
- Invest in the recently acquired subsidiary BBLUNT
The following table contains more information on the IPO:
| IPO Date | 31 October to 2 November 2023 |
| Basis of Allotment | 07-Nov-23 |
| Listing Date | 10-Nov-23 |
| Face Value | Rs. 10 per share |
| Price Band | Rs. 308 to Rs. 324 |
| Lot Size | 46 shares |
| Total Issue Size | Rs. 1,701.44 crores |
| Offer for Sale | Rs. 1,336.44 crores |
| Fresh Issue | Rs. 365 crores |
| Issue Type | Book Built Issue |
| Listing At | NSE, BSE |
Also read :- Upcoming IPOs in November 2023
To conclude
Honasa Consumer Ltd.’s financials have been all over the place, so you should be wary of investing in their IPO. To make a smart investment, you need also examine the company’s strengths, weaknesses, dangers, and industry dynamics.
