Honasa Consumer Ltd, which houses direct-to-consumer skincare brands Mamaearth and The Derma Co, made a tepid debut on stock exchanges on Tuesday with its shares listing at the initial public offering price before inching higher.
The company’s shares began trading at the IPO price of Rs 324 apiece on the BSE and 1.85% higher at Rs 330 apiece on the NSE, stock-exchange data showed. The shares rose to a high of Rs 337.60 in early trading on the two bourses.
The shares closed about 4% higher at Rs 337.15, giving the company a market valuation of around Rs 10,847 crore ($1.3 billion).
The weak debut comes after Mamaearth's IPO was oversubscribed by 7.6 times last week. The offering of 28.9 million shares, excluding the anchor allotment option, received bids for more than 220 million shares. This translated to bids worth Rs 7,130 crore ($857 million).
Institutional investors showed the most interest as their quota of shares was covered 11.5 times. Non-institutional investors, which include high-net-worth investors, bid for about four times the portion reserved for them. Retail investors bid for 1.35 times the number of shares set aside for them.
Mamaearth raised Rs 765 crore from anchor investors, including a bunch of mutual funds and insurance companies, ahead of the IPO.
The startup, led by chief executive and co-founder Varun Alagh, filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India in December last year and received the regulator’s nod in August this year.
The company reduced the size of the fresh issue of shares in the IPO to Rs 365 crore from Rs 400 crore it was looking to raise previously. The IPO also includes an offer for sale of 41.25 million shares by the founders and investors, down from 46.82 million shares proposed to be sold earlier.
Mamaearth fixed a price band of Rs 308-324 per share for the IPO. At the issue price of Rs 324, the offer for sale portion fetched Rs 1,336 crore for the selling shareholders. The total size of the IPO was Rs 1,700 crore ($204 million).
The selling shareholders included co-founders Varun and Ghazal Alagh. Belgium-based investment firm Sofina, and Indian venture capital firms Stellaris Venture Partners and Fireside Ventures also sold part of their stakes. Individual investors who sold shares included Snapdeal co-founders Kunal Bahl and Rohit Bansal, actor Shilpa Shetty Kundra and Sharrp Ventures’s Rishabh Mariwala.
Evolvence India Fund, a UAE-based alternative investment fund that backed the company in December 2021, and Peak XV Partners, (formerly Sequoia Capital India and Southeast Asia) didn’t sell any shares.
