Shilpa Shetty to commit murder in Mamaearth IPO
Sources said that apart from the unrealistically high revenue valuation of the Mamaearth IPO, angel investors will multiply their investment with this IPO.
“Mamaearth’s IPO reported valuation is Rs 24,000 crore which is almost 25x FY22 revenue and 1600x FY22 earnings (PE). These are incredibly premium valuations compared to established brands like Marico or Dabur which are between 50x and 60x PE dealing with older brands and deep offline distribution,” said a source.
Sources said investors have already burned their fingers on IPOs such as PayTm, Nykaa, Zomato and several smaller issues.
Angel investor Devansh Lakhani, director and startup fundraising expert of Lakhani Financial Service, summarized Mamaearth’s lukewarm earnings in a LinkedIn post, Indian Retailer reported.
“In FY23, H1, the company sold Rs 684 crore with a marketing expense of Rs 272 crore. This gives them an ROI of 2.5 which is not that attractive. The company posted a restated cumulative profit after tax (PAT) of Rs 3, 67 crore in the first and second quarters of FY23, according to filings filed with the SEBI. I doubt investors would be interested in investing in a company worth 1,000 times its earnings,” Lakhani stated.
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