Honasa Consumer Limited is the largest digital-first beauty and personal care ('BPC') company in Bharat in terms of revenue from operations for the FY 2023 (Source: RedSeer Report). According to the RedSeer Report, as of the FY 2023, Mamaearth has emerged as the fastest growing BPC brand in Bharat to reach an annual revenue of Rs 10 billion (in the preceding 12 months) within six years of launch. Since launching Mamaearth in 2016, they have added five new brands to the portfolio, namely The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth's. As of June 30, 2023, the portfolio of brands with differentiated value propositions includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments. Company has a dedicated in-house innovation team, consisting of 47 members, as on June 30, 2023, that drives end-to-end ideation and execution of new products launches. This team collaborates with large ingredient suppliers to co-create formulations. For manufacturing, they have set up an asset-light contract manufacturing model. As of June 30, 2023, the brand agnostic, integrated supply chain comprises of 13 warehouses spread across seven districts in Bharat. Of these 13 warehouses, three warehouses are directly managed by them while management of the remaining warehouses is outsourced to third-party partners. The main warehouse, which is based in Pataudi, Haryana, acts as a central hub and distributes products to the regional warehouses in other parts of the country. As per financial performance, Honasa Consumer Limited has posted total income / net profits of Rs 472.10 Cr / Rs (1332.21) Cr (FY21), Rs 964.34 Cr / Rs 14.44 (FY22), Rs 1515.26 Cr / Rs (150.96) Cr (FY23) and Rs 477.09 Cr / Rs 24.71 Cr (Q1 FY24). So as per previous financials data, company has shown good sales growth, but company is making losses. Company has an average EPS of Rs (18.55) and average RoNW of (11.04)% for last three fiscals. Issue is priced at a P/BV of 15.97 as per NAV of 20.29 as on 30.06.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around (7.82), 721.77, (69.05) and 105.45 respectively, which looks very aggressively priced. As per RHP, there is no peers. On BRLM's front, four lead managers are associated with this IPO, and have handled around 95 IPOs in last three fiscals. Kotak Mahindra Capital Company Limited : This is 37th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above issue price or at par. (As on 26.10.2023) Citigroup Global Markets India Private Limited : This is 13th IPO from this BRLM. From last 10 IPOs, four opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, four are trading above issue price or at par. (As on 26.10.2023) JM Financial Limited : This is 38th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one are trading below issue price and remaining are trading above issue price or at par. (As on 26.10.2023) J.P. Morgan India Private Limited : This is 11th IPO from this BRLM. From last 10 IPOs, Six opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, three are trading above issue price or at par. (As on 26.10.2023) As per financials, Honasa Consumer Limited has shown good sales growth, but making losses, RoNW is (23.57)% and P/E is respectively (7.82), 721.77, (69.05) and 105.45 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks very aggressively priced. Company is in business of direct to consumer beauty and personal care, which is highly fragmented and competitive. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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