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Mamaearth IPO: Huge Valuation Drop! 🧴

Mamaearth's just dropped its IPO valuation from 25,000 crore to 10,500 crore! Discover why this bold move might be their smartest decision yet.

Author

Karthik Sridharan
October 26, 2023

Hey there,

We've got some big news from the D2C world. Mamaearth, a brand we've all watched rise to fame, just made a bold move!

They dropped their IPO valuation from 25,000 Cr to 10,500 Cr. But why?

In 2016, Varun and Ghazal Alagh founded Mamaearth. They probably didn't anticipate becoming one of India's most discussed D2C brands.

From a net loss of INR 1,332.2 Cr in FY21 to a net profit of INR 19.8 Cr in FY22, Mamaearth's journey is a great example of how to build sustainable D2C brands in India.

But today, we're here to talk about their recent IPO move. Initially, Mamaearth aimed for a massive ₹25,000 Cr valuation. That's over 1000x their revenue at the time.

However, they've now recalibrated to a more grounded ₹10,500 Cr. This has left many of us wondering, why?

  1. Financial Health: Mamaearth's parent company, HCL, reported a revenue of ₹1,500 Cr in FY23. However, they also faced a loss of ₹151 Cr due to a one-time activity.
    By adjusting its IPO value, Mamaearth is aligning market expectations with its financial reality.

  2. Market Conditions: The past year has been tough for IPOs and startup funding. Mamaearth's adjustment aims to attract a wider investor base in these uncertain times.

  3. Strategic Expansion: Mamaearth has big plans to go global, targeting markets like Bangladesh, Malaysia, Vietnam, and Thailand. A successful IPO is crucial for funding this expansion.

  4. Building Trust: Mamaearth is showing they are a brand rooted in reality and committed to sustainable growth. This move is likely a play to build long-term investor trust.

While lowering an IPO valuation might seem unusual, Mamaearth's move is a sign of their strategic foresight. They are positioning themselves for long-term stability and growth. As October 31, 2023, approaches, all eyes are on Mamaearth. Will this be the move that sets them apart in the D2C landscape?

✍️ Jargon of the day

IPO: This is when a company first sells its shares to the public. Before an IPO, a company is private with a small number of shareholders made up primarily of early investors and professional investors.

After an IPO, the company becomes public, and its shares are traded on a stock exchange.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik