Analysts flag caution on Mamaearth IPO: Here's why

Mamaearth IPO: Analysts suggest avoiding the IPO as the company's financial performance and growth strategy do not inspire confidence

Beauty and Personal Care (BPC) e-retailer Honasa Consumer’s initial public offering (IPO) has failed to find backing from analysts due to the company's weak financial track record and expensive valuation.  

T Manish, Research Analyst at Samco Securities suggests avoiding the IPO as the company’s financial performance does not inspire confidence. 

“The profit has been inconsistent and advertising and marketing expenses are incredibly high at around 40 per cent of the revenues. A clear growth strategy is also lacking, which would include reducing these expenses”, Manish said. 
 

The valuation seems ‘unusually elevated’, considering the risks and lack of sustainable profitability, he