Angel investors, including Bollywood actress Shilpa Shetty, stand to make a killing in the forthcoming IPO of Mamaearth as the company is being valued at Rs 24,000 crore.
Sources said keeping aside the unrealistic high revenue multiple valuations of the Mamaearth IPO, angel investors are going to multiply their investment with this IPO.
“The reported valuation for the Mamaearth IPO is at Rs 24,000 crore which is almost 25x FY22 revenues and 1600x FY22 profits (PE). These are incredibly premium valuations compared to established brands like Marico or Dabur that trade between 50x to 60x PE with legacy brands and deep offline distribution,” a source said.
Sources said investors have already burnt their fingers in IPOs like PayTm, Nykaa, Zomato, and assorted smaller issuances.
Angel investor Devansh Lakhani, Director and Startup Fundraising Expert of Lakhani Financial Service has provided a blow-by-blow account of Mamaearth’s lukewarm profit run in a LinkedIn post, Indian Retailer reported.
“In FY23, H1 the company made a sale of Rs 684 crore with a marketing spend of Rs 272 crore. This gives them an ROI of 2.5 which isn’t that alluring. The company recorded 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 that investors would be interested in investing in a company that is worth 1,000 times its profit,” Lakhani stated.
