Tears of joy, elated investors, promises of going global: How Mamaearth went on to ring the bell

Influencer and entrepreneur Raj Shamani also joined the event to back his “good friends” Ghazal and Varun. Shamani was able to subscribe to the stock successfully, he told Moneycontrol. Youtuber Nikhil Sharma, aka Mumbaikar Nikhil, too was present.

Also Read: Mamaearth parent Honasa Consumer shares close 4% higher on debut

Shetty Kundra, who rang the bell along with Ghazal and Varun, jokingly said, “Abhi tak sirf mandir ki ghanti baja rahe the, aaj NSE ki ghanti baja li.”  She is poised to get an 8X return as an early investor.

Mamaearth’s NSE venue reminds one of a glass-themed greenhouse shining brightly in the sun. The co-founders also colour-coordinated their clothes to match the brand’s green and blue logo colours, an an ode to Mamaearth’s image of clean and natural personal care products.

Investors will hold on 

Representatives and partners of key investment firms, investment banking firms, and law firms were in attendance. These included PeakXV, Fireside Ventures, Stellaris Venture Partners, Titan Capital, Sharrp Ventures, and former BharatPe CEO Suhail Sameer, who is an angel investor. Cyril Amarchand Mangaldas was on the legal team for the IPO.

Even though Peak XV is likely to see 10X gains after joining four years ago, the early-stage venture capital firm has decided to not exit for at least the next few years. Stellaris Venture Partners, one of its earliest investors, concurred.

According to Ishaan Mittal, MD, Peak XV, an IPO is a very important event in a company's journey, but it is still just a pit stop.

“The journey has just started. This company is less than seven years old, has gone public, and has 10 years of compounding ahead. And it's done by our founding team, which is extremely dedicated, focused, and very energetic, building this into the largest beauty and personal care company in India. As an investor and a board member, I see that path very clearly. We are very excited. As you know, we are selling no shares in this IPO because we are very long-term believers. We have been with the company for only four years; we plan to be shareholders for many, many more years to come,” he told Moneycontrol on the sidelines.

The investors were in for a surprise when they were called on stage and given mementos from NSE and Honasa Consumer.

An overwhelmed Rahul Chowdhri, partner at Stellaris Venture Partners, said, “This is the first portfolio company for us to get listed. This is also the first company in the beauty space to get listed. It took just seven years, and I have not seen a company go even public in 16 years, and this fast. So lots of positive emotions. This is a huge return for the fund, but we still continue to hold 6 percent and hope the company will grow.”

He added, “There are lots of lessons people should take from this IPO. Firstly, the whole focus is on profitability. So growth is important at a certain stage, but I think at some point in time, you will also have to start showcasing the bottom line. And once you do that, the public takes you very seriously. I think it also shows that if you're the first to the market, there is always a scarcity value. So for any founders building in a new space, it's a big validation.”

So far, more than retail investors, Honasa Consumer found interest from qualified institutional bidders (QIBs) who bought 11.5 times the allotted quota, while retail investors remained cautious, subscribing 1.4 times.

Some of its marquee investors who bought in include Smallcap World Fund Inc, Fidelity Funds, Abu Dhabi Investment Authority, Government Pension Fund Global, Caisse De Depot ET Placement, FSSA India Subcontinent Fund, Carmignac Portfolio, Goldman Sachs, and Hornbill Orchid India Fund.

Growth over stock price

Both Honasa Consumer and its investors seem to be more focused on driving growth at the moment than chasing the right stock price. The company’s chief financial officer (CFO), Ramanpreet Sohi, shared with Moneycontrol how it took several attempts since May 2022 to get the company finally listed.

Also Read: Honasa Consumer makes muted debut: Should you buy, sell or hold Mamaearth stock?

“We have been working tirelessly on bringing out the IPO since May 2022. It took us a lot more to convince the regulators, being a new-age company and also attempting to list when the markets were down. Hopefully, once all of these events get over, the team will sit together, and I am sure all of us will end up getting emotional,” he said.

Sohi said that stock prices tend to change every day, and one cannot lose sleep over it and that the goal should be to continue building the business.

Peak XV’s Mittal agreed. He believes Honasa Consumer, from an economic structure perspective, will be able to generate profitability that is superior to that of the FMCG industry in India. He added a caveat that when companies are growing very fast, especially like Honasa, which is “compounding at 45 percent as of Q1”, the operating leverage may not fully kick in.

“It takes time because if you're growing fast, you are investing for the future. And we would like these companies to invest for the future because what matters is what happens in 10 years and 20 years, not what happens next month or next week. Share price matters, but that's not the centre of decision-making. The core decision-making is winning market share and being the most important and market-leading company in the Indian beauty and personal care category. And as that story unfolds, profit compounding in this company will be much faster than revenues,” he said.

Honasa’s co-founder and Chief Executive Officer (CEO), Varun, too, hopes to take the company’s brands global. “There is so much more to do. There are so many amazing global beauty companies, and they have taken it global. We want to be the Indian beauty company that makes it global, just like we see Korean beauty products today," he said. Honasa currently has six brands including Mamaearth, BBlunt, Acqualogica, The Derma Co, and Dr. Sheth's.

Varun even got emotional and teared up while speaking to the audience before ringing the bell as he thanked his wife, co-founder Ghazal, and family members.

Ghazal said, “We are living a dream, which we never thought of until 2.5 years ago."

"A lot will change in this journey, but some things will remain: our paranoia for quality, growth, and also our frugality in bringing sustainable growth, which is rooted in our middle-class family values," she added.