The promoters of Urban Company and notable investors like Accel India, Elevation Capital, Bessemer India, VY Capital, and Tiger Global have seen a significant increase in the value of their holdings since the company revealed that the price range for its next public offering would be INR 98–103 per share. Opening on 10 September and closing on 12 September, the IPO aims to raise around INR 1,900 crore.
Promoter and Investor Gains
Around 9.77 crore shares, purchased at minimal cost, are held by promoters Abhiraj Singh Bhal, Chairperson, Managing Director, and Chief Executive Officer; Raghav Chandra, Executive Director, and Chief Technology and Product Officer; and Varun Khaitan, Executive Director, and Chief Operating Officer. Their respective holdings are now worth little more than INR 1,000 crore apiece, a more than 10,000-fold increase in value.
Private Equity Investors to Reap Gains
Accel India IV, which holds 14.52 lakh shares that were bought at an average price of INR 3.77, has seen the value of its holding increase from INR 55 crore to approximately INR 1,500 crore, a huge gain of more than 26 times. Private equity investors are also expected to make significant returns.
With 9.47 crore shares purchased at INR 7.14, Bessemer India Capital Holdings has increased its investment by approximately 13 times, from INR 68 crore to INR 976 crore. Formerly SAIF Partners, Elevation Capital now owns 15.9 crore shares that were purchased at INR 5.39, increasing in value by roughly 18 times from INR 85.7 crore to INR 1,638 crore.
The value of the stake has increased by 67%, from INR 375 crore to Rs 627 crore, after Internet Fund bought 6.08 crore shares at INR 61.65. With 13.46 lakh shares purchased at INR 20.40, VYC11 has seen a 400% increase in value, going from INR 275 crore to INR 1,386 crore.
Urban Company’s Business Model & Expansion
The largest tech-enabled home services marketplace in India was established in 2014 and is based in Gurugram. It operates in 51 locations around India, the United Arab Emirates, and Singapore.
Cleaning, pest control, plumbing, electrical work, beauty and wellness services, and appliance repair are all included in Urban Company’s repertoire. Under its “Native” brand, the company has expanded into residential solutions during the last two years, launching items like electronic door locks and water purifiers.
The IPO’s proceeds will be used for marketing costs, office lease payments, cloud and technology infrastructure, and other general business needs. In the quarter that ended in June 2025, Urban Company reported a net profit of INR 6.9 crore, which was 45% less than the INR 12.6 crore it made in the same quarter the previous year.
A joint venture loss of INR 8.6 crore, poor operating metrics, and increased expenses were the causes of the decline. EBITDA loss increased to INR 4.8 crore from INR 3.36 crore, while revenue increased 30.8% year over year to INR 367.3 crore from INR 280.9 crore.
Quick Shots
•IPO
seeks to raise around INR 1,900 crore.
•Each
founder’s stake now worth over INR 1,000 crore, marking a 10,000x+ gain.
•IPO
proceeds to be used for marketing, office leases, cloud infrastructure, and
general expenses.
•Q1
FY26 results: Net profit down 45% YoY to INR 6.9 crore due to JV losses, weak
metrics & higher costs; revenue up 30.8% YoY to INR 367.3 crore.
Mamaearth is an Indian company engaged in selling Health, Wellness and Fitness products. The company was founded by Varun and Ghazal Alagh in the year 2016 and is headquartered in Gurgaon. It grew exponentially and reached a net worth of INR 115 crore in just four years.
Mamaearth is the flagship brand of Honasa Consumer Limited, which started as a digital-first consumer brand. Its other brand portfolio includes brands such as BBlunt and Aqualogica. The brand is planning to launch an IPO and has filed the Draft Red Herring Prospectus (DHRP) with the Securities and Exchange Board of India (SEBI) on December 20, 2022.
The company has proposed an IPO worth INR 2900 crores. The IPO will consist of a fresh issue of shares worth INR 400 crores and an Offer For Shares (OFS) of approximately 46.8 million shares. The funds raised through the IPO will primarily be used for improving brand visibility and advertising as well as opening exclusive brand outlets.
The company’s founders Varun and Ghazal Alagh along with other investors like Sofina, Fireside Ventures, Evolvence India, Stellaris and angel investors like Kunal Bahl, Rohit Bansal, Rishabh Mariwala and actor Shilpa Shetty will sell a part of their stakes in the company through the OFS.
Mamaearth’s Shareholding Pattern and the Angel Investments in the Startup
The list below gives a detailed view of the angel investments in Mamaearth.
Angels
Invested
YOI
Valuation
Suhail Sameer
₹15 lakh
2016
$2 million
Vijay Nehra
₹15 lakh
2016
$2 million
Shashank Shekhar
₹15 lakh
2016
$2 million
Kunal Bahl
₹69.6 lakh
2017
$5.16 million
Rohit Bansal
₹69.6 lakh
2017
$5.16 million
Shilpa Shetty
₹75.1 lakh
2018
$4.85 million
The Grey Area
There are several concerns floating on social media regarding the high valuation of Mamaearth. The company which was valued at INR 120 crore in January 2022, is seeking a higher valuation of INR 300 crore through its IPO. This target valuation is almost a thousand times higher than its registered profits.
Mamaearth’s Financials in FY22
The company does not have a consistent record of profitability. While it posted a revenue of INR 932 crores with a net profit of INR 14 crores at the end of FY22, it registered a loss of INR 1332 crores in FY21 and INR 428 crore in FY20. In the six months ending September 2022, Honasa Consumer posted a revenue of INR 722 crore with a net profit of INR 3.6 crore. Apart from this, Honasa has also recorded a high advertising spend. In FY22, the company spend approximately INR 391 crore on advertising, which is 40% of its revenue. It has spent a similar percentage of its revenue on advertising in FY21, FY20 and the six-month period that ended in September 2022.
All this information has led to a lot of speculation about the price MamaEarth will set for its IPO.
Sunil Damania, Chief Investment Officer of MarketsMojo says – “We doubt that management will go ahead with the higher price because there has been a lot of backlash on social media, especially given the amount of money Mamaearth is asking; whether you look at the market cap to sales ratio or the price to earnings ratio, which appears to be a little high.”
Tech stocks globally are witnessing a downturn and many IPOs in the recent past have failed to maintain their initial high valuations, falling significantly since their listing. Some prime examples include Zomato, Paytm and Nykaa.
Sunil Damania continues – “Something similar could occur if Mamaearth opts for such a high valuation. However, these are all speculative at the moment because neither the merchant banker nor the company has confirmed that they will proceed with this pricing.”
Anirudh Damani, Founder of Artha Group has a different take. He says – “I am jittery about all IPOs where more than 25% of the money getting raised does not go to the business i.e., it is an OFS from early investors and celebrity backers of the platform. I have understood that almost 80% of this IPO will go towards OFS which does not bode well for public market investors. It will be challenging to see any upside in the stock price with so many questions on super-premium valuation that will primarily provide exits to current shareholders.”
How an IPO Is Valued or Priced?
An Initial Public Offering or IPO listing is when a private company issue shares publicly in the stock market for the first time. This is done either to raise more funds for expansion or to recover from losses or debts. An audit is conducted for the company where all data regarding the company’s financials is carefully scrutinized. This data includes the company’s assets, liabilities, revenue generation, market performance, etc.
There are several methods in the IPO valuation process to define share value. These methods are
Relative Valuation through which the company’s share value is measured by considering the value of similar companies
Absolute Valuation that measures the strength and financial status of the company
Discounted Cash – Based Valuation that analyses expected cash flows, future performance, investment, potential revenue sources and more
Economic Valuation considers various parameters like the business’s residual income, debts to be paid, assets value owned and liabilities, risk-bearing potential, etc.
Price-to-Earning Multiple Valuation that compares the company’s market capitalization to its annual income.
There are various factors that affect the price of shares offered in an IPO. In relation to Mamaearth, these factors are:
Financial Performance Over the Past Few Years
Mamaearth’s financial performance has been erratic and it has not been in sustainable stable growth.
Share Market Trends
Most of the tech stocks have failed to maintain their high valuations and have seen sharp declines in the recent past.
Number of Stocks Issued by an IPO by a Particular Company
The biggest concern is the OFS offer which is being seen as an exit strategy by many of the promoters of the company.
Company’s Potential Growth Rate
The amount raised from the IPO will be used to increase brand awareness and advertising but there is no clear direction.
Company’s Business Model
Mamaearth is primarily a digital-first company. Its Return on Ad Spends (ROAS) has not improved in the last three years suggesting it has very few returning consumers.
Recent Market Price of Companies Listed on the Stock Exchange
Tech companies like Paytm, Zomato and Nykaa have all failed to sustain their stock prices.
Conclusion
MamaEarth is showing great courage by announcing an IPO at a time when tech stocks are witnessing a global slump. However, rising digital penetration, high disposable income, as well as growing awareness in the beauty and personal care segment give the company room for growth and expansion in the future.
FAQ
What is an IPO?
IPO [Initial Public Offering] takes place when a private company issues share publicly for the first time in the stock market. Once the company declares an IPO, the stocks no longer remain private and are collectively owned by all shareholders.
What are the Factors Affecting IPO Valuation?
Here are several major factors that affect the price of the shares offered in an IPO
Company’s financial performance over the past few years
Share market trends
Number of stocks issued in an IPO by a particular company
Company’s Potential Growth Rate
The Recent Market Price of Companies Listed on the Stock Exchange
How can you tell if an IPO is good or not?
Thoroughly review the company’s business model, management credentials, and historical performance. A good starting point when evaluating the best IPO to buy is the red herring prospectus. It contains most of the information you need to evaluate the company.
Is Mamaearth a private company?
Yes, it is a Gurugram-based D2C babycare and skincare unicorn. Mamaearth could be converted into a public company as it readies for an IPO.
