NEW DELHI:: Angel investors, including Bollywood actress Shilpa Shetty, stand to make a killing in the upcoming Initial Public Offer (IPO) of Mamaearth as the company is being valued at Rs 24,000 crore.

Sources said,  angel investors will increase their investment with this IPO, despite the Mamaearth IPO's unrealistically high revenue multiple valuation.

"The reported valuation for the Mamaearth IPO is at Rs 24,000 crore, or about 25 times FY22 revenues and 1600 times FY22 earnings (PE). Compared to well-known brands like Marico or Dabur, which trade between 50x and 60x PE with legacy brands and substantial offline distribution, these valuations are extraordinarily high "added a source.
According to sources, investors have already lost money on IPOs like PayTm, Nykaa, Zomato, and other smaller offerings.

Devansh Lakhani, an angel investor and the director and startup fundraising expert at Lakhani Financial Service, detailed Mamaearth's lacklustre earnings run in a LinkedIn post, according to Indian Retailer.

"The company generated sales of Rs 684 crore in FY23, H1, and spent Rs 272 crore on marketing. They receive a ROI of 2.5 as a result, which is not very appealing. According to documents submitted to the SEBI, the company reported a restated cumulative profit after tax (PAT) of Rs 3.67 crore in the first and second quarters of FY23. I don't think investors would be eager to put money into a business that is worth a thousand times its profit "Lakhani said.

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