An analyst at Jefferies India Pvt. Ltd reports that Mamaearth, managed by Honasa Consumer, has an annual operating income of more than Rs 700 crore ($ 100 million).
Brokerage agency`s analysts have studied the explanations behind Mamaearth's remarkable development in just 5 years since its commencement.
In a report released on April 12, Jefferies analysts said: "From a meager revenue base of Rs 17 crore in fiscal 2019, Honasa Shopper saw a sharp increase with 2021 cash revenue of approximately 500 crores. The core portfolio has grown adequately and New launches have contributed significantly. "
How did Mamaearth come about?
Mama Earth was founded by a married couple, Ghazal Alagh and Varun Alagh, who were struggling to find the right products for their children. Like any caring parent, the couple carefully researches commercially available baby products before purchasing. To your surprise, most baby products, whether lotions or shampoos contain toxins that have been shown to be harmful.
Concerned not only for their baby but also for all young children, the couple decided to do something about it and create completely safe, approved, and toxin-free products. This is how Mama Earth appeared in 2016.
What leads to its growth and success?
Awarded as Asia's first MadeSafe certified personal care brand, toxin-free products for mothers and babies, it is backed by Sequoia India, Fireside, Stellaris, Titan Capital, Bollywood actress, and entrepreneur Shilpa Shetty.
Expanding the product range
Over the years, the brand has expanded its range of baby care products to other areas, particularly hair care and skincare. According to the report, of all Mamaearth model revenue, 20% comes from the baby product range, while the remaining 80% comes from the hair and skincare range.
Its revenue comes primarily from D2C's personal platform, e-commerce channels, and offline sources.
Market placement and advertising
In addition to expanding the target market, another reason companies are growing in such a short period of time is "robust model positioning, product innovation, advertising excellence, and greater reach into retail and distribution," according to Jefferies.
Due to being in the private care class and a mass premium positioning, Mamaearth has a healthy gross margin profile of around 65%. This provides enough space for companies to spend money on advertising (40-50% of revenue in FY19 / FY2020) and increase people's capabilities.
Due to its strong development, the loss of Ebitda (as a percentage of revenue) has decreased from around 27% in the fiscal year 2019 to around 7% in the fiscal year 2020. According to management, the company has switched Ebitda Positive in Fiscal Year 21 is set to achieve a double-digit Ebitda margin in the medium term, says the Jefferies report.
Also Read: Westin Hotels & Resorts opens first Goa property with 171 Keys