Skincare Start-Up Mamaearth Eyes $3 Billion Valuation In 2023 IPO: Report

Mamaearth is targeting a valuation of $3 billion, 10-12 times forward earnings based on sales growth and future revenue potential. It plans to file draft regulatory papers by the end of this year

Indian skincare start-up Mamaearth is considering to raise at least $300 million in a planned IPO next year, citing sources Reuters reported. According to report, Sequoia Capital-backed firm is seeking a valuation of around $3 billion before public listing.

Mamaearth, which was set up in 2016, has become popular in India with its range of ‘toxin-free’ products such as face washes, shampoos, and hair oils and competes with Unilever's India unit, Hindustan Unilever, and Procter & Gamble Co in the booming personal care industry.

The company was last valued at $1.2 billion in January this year when it raised fresh funds from investors, including Sequoia and Belgium's Sofina.

It is targeting a valuation of around $3 billion, 10-12 times forward earnings based on sales growth and future revenue potential, a source said. The company plans to file draft regulatory papers with the Sebi by the end of this year.

According to two sources, Mamaearth is in early-stage talks to raise at least $300 million in its IPO, with a third source pegging the number at $350 million. The company’s target valuation for the IPO, and the funds it plans to raise, have not been previously reported.’

The company is in talks with JP Morgan Chase, India's JM Financial, and Kotak Mahindra Capital to appoint them as bookrunners to the deal, the sources added JP Morgan Chase declined to comment.

Mamaearth's IPO plans come during a broader rout in capital markets and a slowdown in India's booming start-up ecosystem that recorded a stellar $35 billion in record fundraising last year.

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 13.5 crore from 2.5 crore during that period, it added.

One equity research analyst, however, said the success of Mamaearth's IPO could hinge on how it plans to rapidly expand into offline sales. Most Indians still go to retail outlets to shop, with e-commerce accounting for just 5-6 per cent of spending.

Mamaearth, which was co-founded by Varun Alagh, a former Hindustan Unilever executive, and his wife Ghazal, posted a post-tax profit of Rs 24.6 crore for the year ended March 2021.