Mamaearth parent’s shares end 4% higher in debut trade

By Rama Venkat

BENGALURU (Reuters) -Mamaearth parent Honasa Consumer’s shares settled 4% higher after a volatile trading debut on Tuesday, valuing the beauty-and-personal care products maker at 108.46 billion rupees ($1.30 billion).

The stock opened at 330 rupees, a 1.9% premium to its initial public offering (IPO) price of 324 rupees, and settled at 337.10 rupees. That followed strong subscription for the $204.3 million IPO last week.

India has had a record 182 IPOs so far this year, during which the stock market has hit record highs as the country’s economic growth prospects and a vast consumer base make it an attractive destination.

However, companies going public have had a mixed response, with the tepid debuts being on the markets’ condition at that time or valuation concerns or worries about competition. The 182 companies have raised about $5.2 billion, which is a 21.3% drop from the same period last year.

Honasa Consumer, founded by former Hindustan Unilever executive Varun Alagh and his wife Ghazal in 2016, also lowered its offer size after putting its IPO plan on hold in March, blaming weak market conditions.

“The Mamaearth listing was in line with our expectation as investors feel the aggressive pricing is good for long term as the business model has a high-growth potential,” said Prashant Tapse, senior vice president (research) at Mehta Equities.

Honasa Consumer capitalised on the surge in demand for personal care products after the pandemic by scaling up through numerous acquisitions. Mamaearth, though, remains the most popular brand in its house of brands.

However, it is a very competitive space. Nykaa, on Monday, reported its slowest quarterly revenue growth since its IPO in November 2021, due to stiff competition.

But, Arvind Singhal, chairman of consultancy firm Technopak Advisors, thinks Mamaearth has an edge.

“There have been companies like Kama Ayurveda, Forest Essentials and many others in India who came before Mamaearth, but none of them have been able to scale up like Mamaearth.” ($1 = 83.2270 Indian rupees)

(Reporting by Rama Venkat in Bengaluru; Editing by Sohini Goswami and Savio D’Souza)