Varun Alagh on Governance

Varun's leadership style is described as consumer-centric, data-driven and committed to purpose-led growth — exemplified by initiatives like Aqualogica's 'Water for All' campaign, which reportedly provided clean drinking water to over 10,000 people across ten adopted villages. This purpose framing has been central to Honasa's external positioning, not merely a CSR add-on.

Mamaearth's parent, Honasa Consumer Limited, filed its Draft Red Herring Prospectus with SEBI late in 2022 for an IPO comprising a fresh issue of ₹400 crore and an Offer For Sale of 46.82 million equity shares. The DRHP immediately drew criticism from finance professionals and entrepreneurs on LinkedIn, who seized on the reportedly sought $3 billion valuation as out of line with fundamentals.

The valuation gap sat at the centre of the controversy. In January 2022 Mamaearth was valued at $1.2 billion. A year later, the DRHP-anchored IPO ambition was reportedly around $3 billion (roughly ₹24,985 crore). Critics pointed out that this translated to a multiple of more than 1,000 times FY22 profit of ₹19.86 crore — a ratio that invited direct comparisons with the post-listing collapses of Zomato and Paytm.

Critics compared the proposed valuation to the post-listing collapses of Zomato, Nykaa and Paytm — all of which had seen their share prices fall sharply after richly-priced debuts. The broader argument was that Mamaearth's DRHP was repeating the 2021 unicorn-IPO pattern that had already burned retail investors, despite a fundamentally different market mood in late 2022 and early 2023.

Techno-marketing professional Nikhil Kuruganti's analysis went viral on LinkedIn. He estimated the asking valuation at roughly 16x FY23 revenues (extrapolating H1-FY23 revenue of ₹722 crore) and 25x FY22 revenues of ₹943 crore, with a P/E ratio of around 3,000x on H1-FY23 PAT and 1,500x on FY22 PAT — implying Mamaearth would need to grow profits roughly 50-fold to justify the implied valuation.

The Substack analysis frames Mamaearth's listing as a market-wide signal: 2023 had seen 93 IPOs in India by November, and investor appetite had visibly shifted toward profitability over richly-priced growth. The author argues that retail investors would no longer accept valuation anchored on narrative alone — a meaningful change from the 2021 cycle that had embraced Zomato and Paytm at any price.

The piece highlights the dramatic post-IPO collapses that framed the Mamaearth moment: Zomato, listed in July 2021 at a 52.63% premium and 38x oversubscription, fell 66% to ₹41.6 within a year; Paytm, listed in November 2021 at ₹1,950, dropped to ₹441 — a 77% decline. These collapses shaped the cautionary lens through which Mamaearth's DRHP was read by the market.

The article argues the verdict from retail investors is unambiguous: flashy valuations must yield to profitability, and influencers glorifying IPO-led startups can no longer move the market on their own. Startups eyeing 2024 listings — including OYO, Ola Electric, Swiggy, Navi, PayMate and Digit Insurance — were reportedly reorienting toward sustainable businesses in response to this shift.

Anamika also clarified that the cited revenue numbers represented six Honasa units combined, not Mamaearth alone — revenue across Honasa's units had grown 2.5x between 2020 and 2023. The point mattered because it complicated the headline valuation claim: a parent-level multiple applied to consolidated revenue was, in her reading, an overstatement of the standalone Mamaearth story being marketed to retail investors.

The author's framing — that Mamaearth's IPO 'saga reveals a shift in India's IPO landscape' — is the analytical takeaway: a single listing functioned as a market-wide correction mechanism, forcing Indian startup founders to internalise that the public market's tolerance for growth-without-profit had narrowed materially since 2021.

The article frames the LinkedIn backlash itself as a market signal — finance professionals and operators publicly dissecting the DRHP and translating its arithmetic for retail investors. The intensity of the critique foreshadowed the muted retail subscription (1.35x) at IPO time and the small listing premium, both of which validated the critics' central thesis on valuation.