Mamaearth co-founder Varun Alagh got caught in a social media storm over his response to a LinkedIn post questioning his skincare firm’s supposedly unreasonable valuations ahead of its planned IPO.
Writer Ankit Uttam said in a LinkedIn post that its FY22 profit is $2.4 million or nearly Rs 20 crore while its valuation is $1.5 billion, which shows a huge chasm.
Moneycontrol recently reported that Mamaearth is in talks to raise about $150 million in pre-IPO round from SoftBank, QIA, GIC, Fidelity at a valuation of $1.5 billion.
“Mamaearth has also mentioned that it earned a PAT of Rs 3.67 crore for the first six months of FY23 (ended September 30, 2022.). Based on this number, Mamaearth is seeking $1.5-billion valuation,” wrote Uttam.
Varun Alagh responded to the post by saying, “Let me ask another question, given a chance would you invest in Airtel or Amazon in 2003? If the answer is yes, go check there (sic) financials for 1997-2007.”
“When we look for comparables we look for examples from same industry at least. How can we use Amazon, Airtel to justify MamaEarth valuation,” said an X user.
“Let me remind that the valuations of Amazon during 1997-2007 were enormous because of the dotcom bubble and pre-GFC period. Not bcz someone saw their potential. So all Varun’s saying is: “We’re again into a frenzy. So we also deserve crazy valuations”” quipped another X user.
“A personal-care company is comparing itself with Amazon who had successfully turned into a core tech company with AWS and Amazon Lab126 already established by 2006. Amazing times we’re living in,” he added.
Honasa Consumer Ltd, the owner of popular FMCG brands Mamaearth and The Derma Co recently received the much-awaited green light from the markets regulator Securities and Exchange Board of India (SEBI), to proceed with their Initial Public Offering (IPO).
Honasa Consumer’s offering will consist of a fresh issue of equity shares valued at up to Rs 400 crore, along with an Offer For Sale (OFS) of up to 4,68,19,635 shares by promoters and existing shareholders. The selling shareholders in the OFS will include prominent names such as the company’s promoters and co-founders Varun Alagh and Ghazal Alagh, Bollywood actor Shilpa Shetty Kundra, Rohit Kumar Bansal, Sofina Ventures, and Kunal Bahl.
Founded in 2016, Sequoia Capital-backed Mamaearth has become popular in India with its range of “toxin-free” products such as face washes, shampoos and hair oils.
Mamaearth was co-founded by Varun Alagh, a former Hindustan Unilever executive, and his wife Ghazal. With the brand endorsed by popular Bollywood celebrities, the duo has cashed in on growing e-commerce adoption in India by offering its products on platforms such as Amazon and Flipkart.
India’s beauty and personal care industry is expected to grow to $27.5 billion by 2025, from $17.8 billion in 2020, Indian financial services firm Avendus estimates. The number of online shoppers for beauty products is also projected to rise to 135 million from 25 million during that period, it added.
