'Would A Real Shark Invest In It?' Netizens Troll Mamaearth's Ghazal Alagh For 'Emotional Tweet' On IPO Valuation
Its barely been a week since Mamaearth announced its IPO plans for 2023, and the company has been on the receiving end of lots of criticism. The reason? Its the IPO-bound company¡¯s ¡®crazy¡¯ valuation which is doing the rounds.
It's barely been a week since Mamaearth announced its IPO plans for 2023, and the company has been on the receiving end of a lot of criticism. The reason? It's the IPO-bound company¡¯s ¡®crazy¡¯ valuation figures which are making news.
After the disappointing performance of some mega IPOs such as Zomato, LIC and Paytm, netizens are now treading cautiously when it comes to putting their hard-earned money into IPOs.
It's funny how you say everything, except for facts and figures. Investors have learnt it the hard way with IPO's of Zomato/Paytm/Nykaa. The founders of these firms are leaving their baby as an orphan behind. So let's not be emotionally driven.
¡ª Mao (@theoj_detweiler) January 4, 2023
Meanwhile, Mamaerth has been the recent target of criticism from netizens for its '1000 times' valuation rumours ahead of IPO. And on top of that, netizens haven't shied away from trolling Mamaearth's co-founder Ghazal Alagh for posting an 'emotional tweet' denying rumours rather than stating solid figures to back up the clarification.
Responding to social media rumours and news reports on the company's valuation for its IPO, Mamaearth cofounder Ghazal Alagh attempted to clarify some things regarding the valuation of its prospective IPO.
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In a series of tweets, Alagh began by saying that "In our DRHP as is the standard practice there is no mention of valuation. Valuation discovery is a process which will take place over time as we get into deeper conversations with investor community.
In our DRHP as is the standard practice there is no mention of valuation. Valuation discovery is a process which will take place over time as we get into deeper conversations with investor community. (2/6)
¡ª Ghazal Alagh (@GhazalAlagh) January 4, 2023
Adding the emotional aspect to the tweets which further made netizens troll the Mamaearth co-founder, Ghazal said, "We have not quoted or subscribe to the valuation numbers which are getting mentioned in various posts on social media. We have built this company and our brands with a lot of love, the same way we have raised our children."
She added: "The way 1 never leaves the side of their children we firmly stand behind building our brands and this company for times to come. We started Mamaearth with the purpose of providing toxin free products for babies since we ourselves could not find the right products for our baby."
The way 1 never leaves the side of their children we firmly stand behind building our brands and this company for times to come. We started Mamaearth with the purpose of providing toxin free products for babies since we ourselves could not find the right products for our baby(4)
¡ª Ghazal Alagh (@GhazalAlagh) January 4, 2023
"God has been kind, luck favored us, consumers loved us and our team has put in crazy efforts to take it to a level where we are today with 6 amazing brands serving millions of Indian consumers. Even in the eye of the storm we will keep working hard, innovating and building a business that our next generations can be proud of," she further added.
Even in the eye of the storm we will keep working hard, innovating and building a business that our next generations can be proud of. (6/6)
¡ª Ghazal Alagh (@GhazalAlagh) January 4, 2023
Mamaearth's IPO Papers & Valuation
Last week, Honasa Consumer Ltd., the parent company of Indian personal care products startup Mamaearth, filed for IPO, according to draft papers submitted to the market regulator SEBI.
The company's IPO will consist of a fresh issue of shares worth Rs 4 billion or Rs 400 crore ($48.30 million) and an offer for the sale of 46.8 million shares.Investors including Sofina, Stellaris Venture Partners, Fireside Ventures, co-founders Varun and Ghazal Alagh, and Bollywood actor Shilpa Shetty are among those expected to partially sell their stake in Honasa via the offer for sale.
Mamaearth parent, Honasa said it would use about Rs 1.86 billion from the IPO for advertising expenses. The startup reported a consolidated restated profit of Rs 157.2 million in the year ended March 31, 2022, its financial statement showed.
But why have people taken to Twitter to raise red flags around the company¡¯s IPO plans? It's because Mamaearth is reportedly aiming for a valuation of '1,000 times' its profits. A Twitter user explained it in a detailed tweet.
1/ Last valuation for Mamaearth was $1.2 billion in January 2022. The company is now seeking a $3 billion valuation for its upcoming IPO.
¡ª Neeraj Arora (@neerajarora91) January 1, 2023
3/ Mamaearth reported profits of 22 cr last year. If the company goes public at its target valuation, it would be valued at a multiple of 1000 times its profits
¡ª Neeraj Arora (@neerajarora91) January 1, 2023
5/ REAL SHARKS may question whether it's reasonable to give funding to a company at a multiple of 1000 times its profits.
¡ª Neeraj Arora (@neerajarora91) January 1, 2023
7/ For comparison, HUL's last year's profits were 9000 Cr and the company's valuation on the public market is 600,000Cr, a multiple of 66.
¡ª Neeraj Arora (@neerajarora91) January 1, 2023
"It Will Take Investor 100 Years To Recover The Money"
Another Twitter user, who is a Chartered Accountant (CA), mentioned that ¡°Even if it is assumed that funding of Rs 400 crore will take the profits of the company to Rs 240 crore and assuming 100% profit to be given as dividend and the startup grows further at an inflation rate, it will take a poor investor 100 years (value Rs 24,000 crore) to recover his money.¡±
8. Even if it is assumed that funding of 400 Cr will take the profits of the Company to 240 Cr and assuming 100% profit to be given as dividend and Startup grows further at inflation rate, it will take a poor investor 100 years ( Val 24000 Cr) to recover his money#mamaearth
¡ª The Startup CA (@mehulshahca) January 1, 2023
Some market experts have also reportedly flagged concerns about the IPO, particularly its timing. Startups such as Boat and Snapdeal recently shelved their IPO plans keeping in mind the market volatility and macroeconomic headwinds. Given the scenario, many are wondering whether Mamaearth's IPO decision will turn out to be fruitful or not.
Also Read: Net Worth Of Shark Tank India Season 2 Judges
Netizens React To The 'Emotional Tweet'
Reacting to the tweet denying the crazy IPO valuation figures, netizens trolled Ghazal's 'emotional tweet' for lack of clarity on any figures.
Waiting Clarity Part ? pic.twitter.com/bIErkkk83Q
¡ª Investment Books (Dhaval) (@InvestmentBook1) January 4, 2023
Sorry but Can¡¯t find any Clarity in this thread
¡ª Divya Gandotra Tandon (@divya_gandotra) January 4, 2023
Valuation will be decided by investors in future.
¡ª Vikas Goyal (@vikasgoyal_19) January 4, 2023
Two issues are really worth noting:
1) Zero spend on R&D
2) 100% contract manufacturing
Means totally dependent on vendors for product development & manufacturing - a very risky business model.
¡ª Krizzie (@1337xTweets) January 4, 2023
Some netizens also took references from Shark Tank India, the show where Ghazal Alagh has been a judge.
¡ª ?????? ???? | Aditya Joshi (@awriteraditya) January 4, 2023
¡ª Jaideep Sarmah (@jaideep_sarmah) January 4, 2023
¡ª Varun Ahuja (@varunahujaa) January 5, 2023
Well this is more like a call for donation rather than investment ?
¡ª Mayuresh (@mrkpune) January 5, 2023
Sorry , but the real sharks (retail investors) need more clarity
Valuations are figured out by market as per stock valuation and at what price current investors are getting exit Looking at IPO document.
A user suggested that people let the market decide the faith of the IPO.
With all due respect, every enterpreneur works hard for his or her company. But market looks numbers not emotions.
¡ª Deepak Singh (@deepakusingh) January 4, 2023
I am also an enterpreneur and can understand where you are coming from, but let the market decide the faith of this IPO.
All the best.
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