Digital-first skincare company Mamaearth’s profit doubled to Rs 30 crore in the September quarter from the year-ago period, the company said on November 22 in its first quarterly result after listing on the bourses.
The D2C unicorn's revenue grew 21 percent to Rs 496 crore in the quarter under review. Also, the company said that its revenue grew 33 percent in the first half of FY24 when the median growth of the FMCG industry was 9 percent.
"Honasa (parent company of Mamaearth) has been able to deliver market beating growths and constantly improve the profitability portfolio of the company. Our business has grown by 33 percent YoY in H1 FY24 which is 3.8 times the median growth of FCMG companies in India," said Varun Alagh, Chairman and CEO, Honasa Consumer.
"Our profits grew much faster than our revenues, with H1 profit after tax growing by 1,377% to Rs 54 crore. Dr Sheths has become the 4th brand from Honasa portfolio to enter the Rs 150 crore Club after Aqualogica and Derma Co. We will continue to deliver on our commitments to our business, consumers, and investors," he added.
Being a digital-first consumer brand, advertising is one of the biggest expenses for the company. According to its filings, it saw ad costs grow 22 percent in Q2 to Rs 174 crore.
Of the Rs 182 crore of IPO proceeds that Mamaearth intends to spend on ads over the next 4 years, the lion’s share of Rs 150 crore is expected to be for television campaigns, according to its red herring prospectus.
Apart from its digital footprint, the company has build a strong offline distribution as well. As per NielsenIQ, brands of Honasa Consumer retailed at 1,65,937 retail outlets in Sep-23, an increase of 47% in offline distribution YoY.
While most of the ad spends till now have been online on influencers and e-commerce platforms like Amazon and Flipkart, the company’s increasing focus on offline sales means that it will have to ramp up its ad spends on traditional media.
Mamaearth’s revenue from offline channels were 18.63 percent of the total in FY21, 28.87 percent in FY 22 and 36.14 percent in FY 23. For Q1 of FY22, ending June 30, revenue from offline channels was 31.90 percent and for the same period FY 23, it was 33.47 percent.
With the offline share of revenues in an upward trajectory, Mamaearth is increasingly competing with the likes of HUL, P&G, Dabur and Reckitt on their territory. This is expected to demand more operations and advertising resources to be spent on the ground with the deep-pocketed incumbents.
The stock closed at Rs 352 on the BSE, down 4 percent from the previous close.
After a controversy earlier this year when Mamaearth’s founders rubbished reports that it was seeking a valuation of over $3 billion, the company priced itself at around $1.25 billion (or Rs 10,423 crore) in its IPO. This was a flat valuation compared to the $1.2 billion the company commanded in 2022 when it had become the first unicorn of the year.
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