Mamaearth, which is run by Honasa Consumer, currently has an annual revenue run rate of more than ₹700 crore ($100 million), according to analysts at Jefferies India Pvt. Ltd. The brokerage firm’s analysts have studied the reasons behind Mamaearth’s remarkable growth in just about five years since the latter's birth in 2016. The company now derives a bulk of its revenues from online platforms.
“From a meager revenue base of Rs17 crore in financial year 2019, Honasa Consumer has seen a meteoric rise with financial year 2021 revenues at about ₹500 crore. Base portfolio has grown well and new launches have also contributed," said Jefferies’ analysts in a report on 12 April. They added that the company is looking to clock revenues worth around ₹2000 crore over the next three years.
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Mamaearth’s founders Ghazal Alagh and Varun Alagh launched the brand with the aim of making products which are mum-baby friendly, toxin-free and meet stringent international standards. Over time, the company has expanded its product range from catering to babycare/new mothers into broader personal care categories, especially in haircare and skin care. According to Jefferies, only 20% of the Mamaearth brand revenues now come from its baby products range, while 80% is derived from skincare and haircare products launched in the last 2-3 years.
The brand has now emerged as a strong direct-to-consumer (D2C) brand in the personal care category with its own website and app, targeting young millennials. Revenues are derived through its own D2C platform, e-commerce channels and offline sources.
The company relies on digital marketing and also has Bollywood celebrity endorsements for its various products. A few months ago, it has also launched another brand called The derma co. Jefferies maintains some factors that have facilitated the company’s rise in such a short span of time are strong brand positioning, product innovation, marketing excellence and expanding retail reach and distribution.
What’s more, unit economics are profitable. “Being in the personal care category and its mass premium positioning, Mamaearth enjoys a healthy gross margin profile of about 65%. This gives the company enough head-room to invest in marketing (40-50% of revenue in FY19/ FY20) and ramping up people capabilities. Given its strong growth, Ebitda loss (as a % of revenue) declined from around 27% in FY19 to around 7% in FY20. As per management, the company turned Ebitda-positive in FY21 and plans are to achieve strong double-digit Ebitda margin in the medium-term," pointed out the Jefferies report.
Ebitda is earnings before interest, tax, depreciation and amortisation; a key measure of profitability for companies.
