Market experts predict that Mamaearth’s parent company, Honasa Consumer, will likely have a stable or slightly positive stock market debut on November 7. Mamaearth’s IPO faced challenges, but it fared well. Qualified institutional bidders showed strong interest by oversubscribing 11.5 times, while retail investors approached with more caution, subscribing only 1.4 times the allotted shares.
“The subscription data saw better than street estimation and the market view has now turned neutral from a cautious one despite the risk of investing in a loss-making business, a high portion of OFS, high competition with margin pressure and low promoter stake which suggest a cautionary stand as historical listings with high valuations have often faced post-listing challenges,” said Prashanth Tapse, Research Analyst and Sr VP Research at Mehta Equites.
Honasa Consumer, owned by Varun Alagh and Ghazal Alag, successfully raised Rs 1,701 crore through its IPO. The offering consisted of a fresh issuance of shares worth Rs 365 crore and an offer-for-sale of 4.13 crore equity shares by promoters and investors. The IPO was open for subscription from October 31 to November 2, with a price band set at Rs 308-324 per share.
Tapse expects a flat listing and advises allotted conservative investors to book profits on the listing day and wait and watch for better pricing post listing while risk-takers can consider holding it long-term for potential high product growth.
However, Anushi Vakharia, Research Analyst, StoxBox expects the stock to open marginally higher due to the decent subscription figures.“Based on its annualized FY24 EPS, the IPO appeared to be aggressively priced at 97x, discounting all immediate positive factors and seemed like the company was leveraging its proven track record to justify a premium valuation,” said Vakharia.
