HCL, the parent company of direct-to-consumer unicorn Mamaearth, is preparing for a significant initial public offering (IPO) scheduled for October 31, 2023. The firm aims to raise INR 1,700 Cr ($227 million), targeting a valuation of INR 10,500 Cr ($1.4 billion). The IPO process is being managed by investment banks including Kotak Mahindra Capital.
InvestingPro's real-time metrics reveal a few key strengths of HCL. The company consistently increases its earnings per share and has raised its dividend for four consecutive years, indicating a high earnings quality. Its free cash flow also exceeds its net income, a positive sign for potential investors. The company is a prominent player in the IT Services industry, and its stock generally trades with low price volatility.
The company has decided to forgo a pre-IPO funding round. It submitted its Draft Red Herring Prospectus to the Securities and Exchange Board of India (SEBI) last year and plans to open the anchor portion on October 30.
The funds raised from the IPO will be used to boost marketing efforts, establish new outlets, and expand BBlunt salons. Existing shareholders such as the Alaghs and Sofina Ventures SA plan to reduce their holdings as part of this process.
Mamaearth posted a net profit of INR 19.8 Cr ($2.6 million) for the fiscal year 2022. The company has achieved revenue from operations amounting to INR 931.7 Cr ($124 million). In recognition of its financial performance, HCL has attained unicorn status with a valuation of $1.2 billion.
According to InvestingPro Tips, HCL operates with a moderate level of debt and its liquid assets exceed short-term obligations. This is particularly relevant as the company is currently expanding its international presence. It covers over 18,000 Indian pin codes and operates in countries like the UAE, Qatar, and Nepal. The firm sells its products through more than 100,000 fast-moving consumer goods (FMCG) retail outlets in India. The company is planning further expansion into Bangladesh, Malaysia, Vietnam, and Thailand.
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