Healthcare

What justifies Ghazal Alagh Mamaearth’s meteoric rise to $100 million in revenues?

Mamaearth has now risen as an influential D2C brand in the personal care category with its exclusive website and app, targeting young millennials. Revenues are procured from its D2C platform, e-commerce channels and offline origins.

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Mamaearth, which is operated by Honasa Consumer, currently has an annual revenue run rate of more than ₹700 crores ($100 million), as per analysts at Jefferies India Pvt. Ltd. The brokerage firm’s analysts have analysed the speculations behind Mamaearth’s striking growth in just about five years since the latter’s birth in 2016. The company now acquires a majority of its revenues from online platforms.

“From a meagre revenue base of Rs17 crore in the financial year 2019, Honasa Consumer has seen a sudden rise with the financial year 2021 revenues at about ₹500 crores. The base portfolio has grown well and new launches have also contributed,” said Jefferies’ analysts in a report on 12 April. They further figured that the company is endeavouring to clock revenues worth around ₹2000 crore over the next three years.

Mamaearth’s founders Ghazal Alagh and Varun Alagh propelled the brand dedication to make products that are mum-baby friendly, toxin-free and satisfy rigorous international norms and standards. Over time, the company has extended its product variety from catering to baby care/new mothers into more comprehensive personal care kinds, especially in hair care and skin care. As per Jefferies, only 20% of the Mamaearth brand earnings now come from its baby products range, while 80% is acquired from skincare and haircare products lanced in the last 2-3 years.

courtesy- mama earth

The brand has now developed as a strong direct-to-consumer (D2C) brand in the personal care category with its website and app, targeting young millennials. Revenues are derived through its D2C platform, e-commerce channels and offline sources.

The company relies on digital marketing and also has Bollywood celebrity advertisements and endorsements for its numerous products. A few months ago, it has also thrust another brand described The derma co. Jefferies manages some factors that have promoted the company’s rise in such a short period are strong brand positioning, product innovation, marketing perfection and growing retail extent and distribution.

Mamaearth’s unit economics are favourable and profitable. “Being in the personal care category and its mass premium positioning, Mamaearth possesses a healthy gross margin profile of about 65%. This gives the company ample head-room to invest in marketing (40-50% of revenue in FY19/ FY20) and ramping up people’s capabilities. Given its strong growth, Ebitda loss (as a % of revenue) decreased from around 27% in FY19 to around 7% in FY20. As per supervision, the company became Ebitda-positive in FY21 and plans are to deliver strong double-digit Ebitda margin in the medium-term,” led out the Jefferies report. Ebitda’s earnings are before interest, tax, depreciation and amortisation. It is a key dimension of profitability for companies.

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