If Mamaearth lists at Nykaa’s valuation, Shilpa Shetty’s investment will be up 700%!

Hot Stocks
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January 23, 2023
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In 2018, Shilpa Shetty had acquired 16 lakh shares of Mamaearth at Rs 41.86 apiece, which amounts to 0.52 percent stake in the company. At a market capitalisation of Rs 10,685 crore, her investment will be worth Rs 55.5 crore

Honasa Consumer, parent of Mamaearth, is looking to raise Rs 400 crore through a fresh issue of shares, apart from an offer for sale of around 4.7 crore shares.

“Valuation discovery is a process which will take place over time as we get into deeper conversations with investor community”. That was Mamaearth co-founder Ghazal Alagh’s response after the company faced #FinTwit’s ire for demanding a ‘sky-high, disastrous’ valuation for its public offering.

Keeping Alagh’s comment aside, it is certain that Bollywood actor Shilpa Shetty will be laughing all the way to the bank as her Rs 6.8 crore investment in the company will grow multi-fold. The question is by how much?

Let’s assume that Mamaearth lists at Nykaa’s current market capitalisation-to-sales (or price-to-sales) valuation, given both are direct-to-consumer (D2C) companies in the beauty and personal care (BPC) space. Nykaa trades at 7.4 times P/S based on FY23 annualised sales.

Honasa Consumer, parent of Mamaearth, filed its draft red herring prospectus on 29 December, 2022. It is looking to raise Rs 400 crore through a fresh issue of shares, apart from an offer for sale of around 4.7 crore shares.

Meanwhile, here is the co-founders’ response to all speculation “God has been kind, luck favored us, consumers loved us… Even in the eye of the storm we will keep working hard, innovating and building a business that our next generations can be proud of.”

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