Varun Alagh on Unit Economics

Advertising efficiency became the second flashpoint. Mamaearth reportedly spent about 40% of revenue on marketing with a Return on Advertising Spends (ROAS) of roughly 2.6, compared to Nykaa's 7.8 and Hindustan Unilever's 10.6. That gap raised the question of whether the brand's growth was sustainable without continued heavy ad-spend reinvestment — a structural challenge for D2C brands at scale.

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.