New-age firms going for public listings have failed to inspire in recent times. So when Honasa Consumer Pvt. Ltd, the parent of skin care brand Mamaearth, filed its draft papers on 29 December, prospective investors got worried. The company had not quoted a valuation figure, but based on an earlier Reuters report, social media users put two and two together to conclude that Mamaearth would seek a steep valuation—or, price-to-earnings (P/E) ratio—of over 1,600 times its last fiscal year’s profit. (The company has proposed a fresh issue of equity shares worth up to ₹400 crore and an offer for sale of up to 46.8 million shares.) The spotlight is again on new-age IPOs that are seen as risky due to uncertainty in their businesses. Experts say higher valuation is justified if a company can chart a realistic path.
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