Incorporated in 2016, Honasa Consumer Limited is India’s largest digital-first beauty and personal care (BPC) company in India. Since launching its flagship brand - Mamaearth, in 2016, it has added five new brands to its portfolio, including The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s, building a ‘House of Brands’ architecture.
Its products cater to market segments such as baby care, face care, body care, colour cosmetics and fragrances. As of 30 June 2023, it has a dedicated in-house innovation team of 47 members, that drives end-to-end ideation and execution of new product launches.
These products are distributed through an omni-channel distribution network. First, trials are generated using its leverage on online channels. Once a product or brand reaches a mature stage, it is selectively introduced in offline stores. It even recorded the highest revenue from offline channels among digital-first BPC companies in India in FY23.
The company operates a data-led contextualised marketing strategy. It integrates consumer data across demographic, behavioral, and transactional variables and influencer collaboration on digital platforms to deliver personalised user experience.
Between FY21 and FY23, it saw a CAGR rise of over 48% in its revenue from operations. In terms of gross merchandise value, the company has a market share of 5.4% in the online BPC market in the calendar year 2022. Moreover, the BPC products market in India is expected to grow at a CAGR of ~11% between FY22 and FY27. All of this could be beneficial for the company.
And now, Honasa Consumer Limited is coming out with its initial public offer (IPO). The IPO will be an offer for sale as well as a fresh issue. The money raised through the fresh issue will be utilised for advertisement expenses, capital expenses to set up new EBOs (Exclusive Brand Outlets), investment in its subsidiary ‘BBlunt’ and general corporate purposes. Its shares will be listed on the NSE and the BSE.
Key Highlights
- One of the largest digital-first beauty and personal care (BPC) company in India.
- Its portfolio of brands includes Mamaearth, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s.
- Caters to market segments such as baby care, face care, body care, hair care, colour cosmetics and fragrances.
- Has a dedicated in-house innovation team of 47 members as of 30 June 2023. Products are manufactured on a contractual basis.
- CAGR rise of 48% in its revenue from operations between FY21 and FY23. Holds a market share of 5.4% in the online BPC market in India in FY22.
- Presence of an omni-channel distribution network.
- Operates a data-led contextualised marketing strategy.
- Fastest growing BPC brand in India to reach an annual revenue of ₹10 billion within six years of launch.
Strengths
- Brand building capabilities as it introduced new BPC brands and products in the last seven years based on changing consumer dynamics.
- Ability to drive growth as it saw a CAGR rise of 48% in its revenue from operations between FY21 and FY23 compared to the industry average of 28%.
- Repeatable playbooks as 38%, 43% and 56% of its revenue from operations generated in FY21, FY22 and FY23, respectively, from the DTC (direct-to-consumer) channel for the Mamaearth brand came from existing customers.
- Consumer-centric product innovation such as Social Listening, Online Competitive Intelligence and User Conversational Research.
- Digital first distribution strategy followed by omni-channel distribution as it derived 81%, 69% and 59% of its total revenue from operations in FY21, FY22 and FY23 from DTC and e-commerce marketplaces.
Risks and threats
- Completely reliant on third party manufacturers for production, which accounted for 81%, 70% and 51% of the total value of its purchase of traded goods in FY21, FY22 and FY23 respectively.
- Faces intense competition as the BPC space has a low barrier to entry.
- Has recorded losses in the past, making up ₹1,332 crore in FY21 and ₹150 crore in FY23.
- Derives a significant portion of its revenue from the Mamaearth brand representing 96%, 93% and 81% of its total revenue from operations in FY21, FY22 and FY23 respectively.
- Incurs significant advertisement expenses such as ₹530 crore in FY23. Also, it heavily relies on celebrities and social media influencers as part of its marketing strategy.
- Has experienced negative cash flows from operating, investing and financing activities in the last three years.
You can now apply for Honasa Consumer Limited IPO on Upstox. Click here: Honasa Consumer Limited (Mamaearth) IPO - Details: Honasa Consumer Limited (Mamaearth) IPO date, Share Price, Lot Size, Allotment Status