Is Mamaearth IPO another Paytm in the making?

Twitter users have been raising valuation concerns ever since Honasa Consumer Ltd, which owns new-age FMCG brands like Mamaearth, filed papers with capital markets regulator Sebi to raise funds through an initial public offering (IPO).

The Sequoia- and Sofina-backed company's IPO will comprise of a fresh issue of shares worth 4 billion rupees ($48.30 million) and an offer for sale of 46.8 million shares.

In January 2022, Honasa Consumer raised $52 million at a valuation of $1.2 billion. One year later, the company is seeking a valuation of $3 billion through its IPO. The valuation target is more than 1,000x its profits, which has left the market perplexed.

Mamaearth IPO has drawn comparisons with the Paytm IPO that turned out to be a dud on its listing date itself because of the massive asking price.