Mamaearth IPO: Twitter divided over personal care unicorn’s brand valuation

On December 29, popular brand Mamaearth’s owner Honasa Consumer filed its Draft Red Herring Prospectus with market regulator Securities and Exchange Board of India to raise around ₹2,900 crore through an initial public offering. Twitter users slam Mamaearth IPO, raise question over company’s valuations and ad spend Several social media users raised the alarm over Mamaearth IPO and exercised retail investors to exercise caution over applying for the Initial Public Offering in an already volatile market, especially after their unpleasant experience with Zomato and PayTM shares, which have had similar over-valuation concerns. Guys Don’t Invest in #mamaearth Ipo It’s a Pump and Dump Scheme Company profits at 22Cr & valuation at 24000 Cr 1100 Times, whom you are making fool Remember Nyka and Paytm case IPO is Organised Robbery for these kind of companies and DRHP filing batch#boycottmamaearthipo — Krish™ December 31, 2022 Several others also pointed out another metric, the company’s Return On Advertising Spend, that they claimed had massively influenced their decision on Mamaearth IPO. #mamaearth IPO Alert Their Return on Ads Spend FY20 :2.4 FY21 : 2.6 FY22: 2.4 FY23: 2.5 Their ROAS has not improved at all that gives indication that users are not coming back and they have to spend more to aquire new users Average acceptable ROAS is 4.0+ — 🇮🇳 𝙆 𝘼 𝙔 – 𝙆 𝘼 𝙔 January 3, 2023 The company had spent Rs 391 crores in advertising, a staggering 40 per cent of its net sales of Rs 932 crores.