Mama Earth is a popular baby care & skin care company with organic products.
It recently announced its plans for an IPO, seeking a valuation of $3 billin.
There's just one problem.
Let's find out in a 🧵:
#mamaearth #StockMarket #ipoalert #investing
It recently announced its plans for an IPO, seeking a valuation of $3 billin.
There's just one problem.
Let's find out in a 🧵:
#mamaearth #StockMarket #ipoalert #investing
The company is backed by celebrity investors like Shilpa Shetty and the big names in the VC world : Sequoia Capital and Fireside Ventures Fund.
It was also valued at $1.2 billion in 2021 making it a unicorn.
Clearly, the company must be making millions in profits?
Not really.
It was also valued at $1.2 billion in 2021 making it a unicorn.
Clearly, the company must be making millions in profits?
Not really.
Honasa Consumer Ltd, that owns Mama Earth posted a net profit of just INR 19.8 crore in FY21.
It had incurred a loss of INR 1332.2 crore in FY20.
But what is more interesting is an exceptional clause that was inserted into the shareholders' agreement in FY21.
It had incurred a loss of INR 1332.2 crore in FY20.
But what is more interesting is an exceptional clause that was inserted into the shareholders' agreement in FY21.
This clause says that if the company cannot provide investors with an exit within a certain time frame, then it will have to offer a buyout.
This exceptional item has been shown as an expense in the P&L statement under IND-AS rules.
The IPO couldn't have come at a better time.
This exceptional item has been shown as an expense in the P&L statement under IND-AS rules.
The IPO couldn't have come at a better time.
So, here's a company that makes a net profit of ~INR 20-25 crore and seeking a valuation of INR 24000 crore!
Almost a 1000x multiple that does not make sense at all.
Even if they grow at 100x from here, the company would be extremely expensive at this valuation.
#Price
Almost a 1000x multiple that does not make sense at all.
Even if they grow at 100x from here, the company would be extremely expensive at this valuation.
#Price
Retail investors are still recovering from such expensive IPOs like Nykaa, Zomato and PayTM.
Prices for these stocks have eroded almost 80-90% and PayTM has even initiated a buyback at 1/3rd the IPO price to add insult to injury!
#Paytm #Zomato
Prices for these stocks have eroded almost 80-90% and PayTM has even initiated a buyback at 1/3rd the IPO price to add insult to injury!
#Paytm #Zomato
I really hope my fellow retail investors don't get trapped again with this one, and will do their own research before applying for this IPO.
Do not believe the hype, and invest your money wisely.
#mamaearth @ipo_mantra @dmuthuk #StockMarket
Do not believe the hype, and invest your money wisely.
#mamaearth @ipo_mantra @dmuthuk #StockMarket
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