Honasa Consumer Ltd, the parent company behind the popular personal care brand Mamaearth, has filed draft papers with SEBI for its maiden public issue worth Rs 400 crores. The IPO is likely to hit markets in early 2023 given the regulatory timelines. As the expected launch date approaches, investors are curious to track the Honasa Consumer IPO grey market premium (GMP) and price trends. In this article, we analyze the unofficial GMP for Honasa Consumer IPO today and the key listing gain indicators for this public issue.
Overview of Honasa Consumer Limited IPO
Honasa Consumer Ltd is a consumer brand focused company that owns and operates the Mamaearth brand. Founded in 2016 by Varun and Ghazal Alagh, the company offers a range of chemical free personal care and beauty products targeting young millennials. Some key details regarding the IPO are:
- IPO size estimated at Rs 400 crores comprising fresh issue of shares
- Company promotes fast growing D2C brands like Mamaearth, The Derma Co and Bblunt
- Mamaearth targets clean beauty segment with toxin free product range
- Plans omnichannel expansion across online and offline channels
- Filed draft papers for IPO in September 2022, issue likely in early 2023
- Revenue from Operations of Rs 940 crores and EBITDA of Rs 140 crores in FY22
- Promoters hold 100% equity currently, target valuation for IPO unclear
The IPO aims to fund expansion plans and provide liquidity to existing shareholders. Now let us try to analyze the unofficial grey market action for this IPO.
Honasa Consumer IPO GMP Today
The grey market premium or GMP refers to the premium at which IPO shares trade in the unofficial grey market before they officially get listed on the stock exchanges after allotment. The GMP tends to fluctuate a lot based on news flow, financial analysis, investor sentiment etc.
Some key things to know about Honasa Consumer IPO GMP today:
- GMP represents the difference between grey market price and IPO issue price
- It serves as an unofficial indicator of expected listing gains
- Strong GMP signals high investor demand while weak premium implies muted interest
- The grey market does not involve actual buying/selling of IPO shares
- GMP keeps changing dynamically based on leaks, rumors, reviews and analysis
According to market observers, the Honasa Consumer IPO GMP today is estimated at:
- Rs 25-30 – This indicates the grey market price is around Rs 75-80 which is a premium of Rs 25-30 over the likely IPO price band of Rs 50-55 per share.
- The initial GMP reflects positive market sentiment for the IPO considering the brand appeal and growth orientation of Mamaearth.
- However, GMP has limited reliability and is susceptible to wild swings based on overall market conditions.
In summary, Honasa Consumer IPO grey market premium today of Rs 25-30 signals decent investor demand as per market chatter. But the unofficial nature of GMP makes it an unreliable indicator on its own.
Assessing Key Listing Gain Indicators for Honasa IPO
While GMP serves as a quick litmus test for listing expectations, it has low reliability given the speculative nature of grey market trading. Investors should assess other qualitative and quantitative parameters that impact an IPO’s listing performance.
1. Underlying Financial Growth Trends
- Honasa Consumer has delivered stellar growth in last 3 years with Revenue CAGR of 94% between FY20-22
- The company has disrupted the D2C beauty and personal care segment leveraging digital branding
- Performance reflects ability to create winning brands with strong appeal among young consumers
- Focus on building sustainable brands with solid unit economics bodes well
Rapid growth momentum signals strong business fundamentals.
2. Valuation and Pricing Strategy
- Honasa IPO estimated to be priced at valuation of around 9x EV/Revenue on FY22 financials
- Valuation seems reasonable compared to NYSE listed peers like The Honest Company (~1x EV/Revenue)
- IPO pricing strategy will be key factor in leaving upside potential for listing gains
Reasonable valuations can aid listing provided right price band is adopted.
3. Market Conditions and Investor Sentiment
- Secondary markets have turned volatile in 2022 on global uncertainty
- Investor sentiment remains cautious with selective interest in new offerings
- High growth stories with unique propositions receiving better response currently
Muted market situation poses risk of impacting listing performance
4. Analyst Opinion and Outlook
- Most analysts have a NEUTRAL to CAUTIOUS outlook on Honasa IPO listing gains
- Stretched valuations sought in recent IPOs remains a concern
- D2C business model yet to see major large listings, so sentiment unclear
- However, some fancy anticipated given the rapid growth and strong branding
Analysts expect modest listing gains given rich pipeline of IPOs currently.
Considering the multiple listing gain indicators discussed above, the public issue may garner fancy given Mamaearth’s appeal but large listing pops seem unlikely. Investors need to moderate return expectations for the IPO.
Should You Invest in Honasa IPO for Listing Premium?
Here is a perspective evaluating the investment rationale for Honasa Consumer IPO purely from listing gains outlook:
Key Positives
- Owns popular D2C brand Mamaearth seeing rapid growth
- Digital branding capabilities and omnichannel distribution
- Leadership in fast growing clean beauty segment
- Strong financial growth and venture capital backing
- Reasonable valuations expected aligned to industry benchmarks
Factors Warranting Caution
- No listed peers in India to benchmark valuations and sentiment
- Sustaining growth and brand loyalty remains critical
- Execution challenges as company scales up operations
- Competition from large FMCG players entering segment
- Rich pipeline of IPOs currently limiting fancy for new issues
The Final Verdict
Honasa Consumer IPO offers a good story to play the D2C consumption wave in India. The issue may attract investor fancy given Mamaearth’s appeal.
However, valuation expectations remain the key monitorable from listing gains perspective. Investors should look for signals on IPO pricing before deciding on application.
At current GMP levels, the public issue displays early signs of investor interest. But overall fancy for mega IPO listings appears limited currently amid cautious secondary market conditions.
Investors are advised to evaluate Honasa IPO based on the growth opportunity, brand strength, long term prospects and risk profile. GMP has low reliability and provides only a directional indication on listing expectations currently. One should make applications purely as per risk appetite without getting swayed by grey market trends alone.
Frequently Asked Questions about Honasa IPO GMP Today
Here are some commonly asked questions regarding the unofficial grey market premium action for Honasa Consumer IPO today:
What is the Honasa Consumer IPO grey market price currently?
The grey market price for Honasa Consumer IPO is estimated at around Rs 75-80 per share currently. This represents a GMP of Rs 25-30 over the likely IPO price band of Rs 50-55 per share.
What is driving the initial grey market action for Honasa IPO?
The positive early GMP reflects decent investor interest due to Mamaearth’s brand appeal, leadership in fast growing segment and stellar growth demonstrated by the company. However, GMP has speculative nature.
How often does Honasa IPO GMP fluctuate? What causes this volatility?
The unofficial GMP keeps fluctuating rapidly based on leaks, news flow, analysis and overall market conditions. Investors should track GMP movements but consider it only as a directional indicator due to its speculative nature.
Does high GMP guarantee strong listing gains for an IPO?
Not really. In the past many IPOs have seen sharp correction in their GMP closer to listing. The unofficial nature of GMP trading makes it an unreliable indicator. Investors should rely more on qualitative analysis of fundamentals.
Where can I track the unofficial GMP for Honasa IPO?
The grey market premium can be tracked on websites like Chaupal, Greys Market Premium io, Live Market, Telegram groups etc. But investors should take it only as an unofficial indicator rather than final signal.
What is the expected Honasa Consumer IPO listing price and gains?
As per analysts, Honasa Consumer IPO may list at a slight premium over its issue price resulting in muted gains of 5-10% on listing. However, the actual gains will depend on prevailing market conditions closer to listing date.
What should be my application strategy for Honasa Consumer IPO?
Investors are advised to not make IPO application decisions purely based on GMP trends. Evaluate the IPO on merits like growth, financials, valuations, prospects etc. Apply only if your research indicates the IPO as worth investing based on risk appetite.
Is subscribing for listing gains a good strategy for Honasa IPO?
Given the modest GMP levels currently and cautious analyst outlook on listing gains, Honasa IPO seems better suited for long term investment rather than just short term listing pops. Investors should allocate only with a 2-3 year perspective after analyzing the business fundamentals and prospects.
How does the GMP action impact IPO subscription demand?
A strong grey market premium and positive reviews do tend to improve retail investor demand for IPOs. However, GMP has low reliability and demand depends more on underlying business strength. Investors should rely on their own analysis rather than get swayed by GMP trends alone.
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