How Varun and Ghazal Alagh's Mamaearth became profitable D2C empire

Celebrating seven years of success, the company eyes future growth with a diversified portfolio and strong offline presence

In a beauty and personal care (BPC) market inundated with toxin-ridden products, it can be challenging to find brands that aren’t pumped full of harmful chemicals.

Enter Mamaearth, which has been able to build a D2C empire by offering consumers “safe, natural, toxin-free products.”

The company recently celebrated its seventh anniversary since starting its operations in December 2016. Founded by husband-and-wife duo Varun and Ghazal Alagh, Mamaearth soon became one of the fastest-growing beauty and personal care (BPC) brands in the country.

In a span of six years, Mamaearth created a product portfolio of over 200 and reached over 5 million customers across 500 Indian cities.

“As I reflect over the years gone by, I am filled with joy and gratitude to our consumers, team, and partners who have made every year better than the passing year. We promise to stay committed to our values and will strive harder to deliver on your evolving demands,” said Ghazal Alagh, Co-Founder and Chief Innovation Officer, Honasa Consumer, celebrating the milestone.

Taking a “science-based” approach, the company caters to “personal care needs of young, aspirational, and increasingly conscious Indian consumers.”

Mamaearth earns its revenues through its own D2C platform, ecommerce marketplaces like Amazon, Flipkart, and Nykaa, and offline channels. Nykaa – a listed entity – is also one of the firm’s largest competitors.

After its stellar public listing in late October, Honasa Consumer – the parent firm of Mamaearth – reported a 94 per cent year-on-year (Y-o-Y) increase in its net profit to Rs 29.4 crore for the second quarter (Q2) ended September 30, up from Rs 15 crore in the year-ago period. The company had posted a profit of Rs 24.7 crore a quarter ago.

Mamaearth’s consolidated revenue from operations grew 21 per cent Y-o-Y to Rs 496.1 crore, up from Rs 410.4 crore a year ago and Rs 464.4 crore in Q1 FY24. This was driven by volume growth of 27 per cent Y-o-Y.

According to Varun Alagh, Chairman and CEO, Honasa Consumer, the business grew by 33 per cent Y-o-Y in H1 FY24, which was 3.8 times the median growth of FMCG companies in India. The company’s profits grew much faster than our revenues, with H1 PAT growing by 1,377 per cent to 54 crore.

The company also recently raised around $92 million in a pre-IPO round from notable investors such as Smallcap World Fund Inc, Fidelity International, Abu Dhabi Investment Authority, Government Pension Fund Global, Carmignac Portfolio, and Goldman Sachs, among others.

Going forward, the company plans to continue its expansion spree, while simultaneously improving margins.

“What we have demonstrated in H1 is that we can deliver market-beating growth while improving profitability. That is how we look at the future as well,” Alagh recently told Business Standard.

The company is looking to double down on expanding its offline distribution network – where it sees a lot of headway, as well as gain share in newer categories.

During H1 FY24, Mamaearth increased its offline distribution to 165,937 outlets, which translates to growth of 47 per cent Y-o-Y (as of September 2023). Based on a report by brokerage firm Jefferies, Mamaearth also entered the top 15 BPC brands in India, ahead of many legacy brands.

With profits abound and a healthy growth trajectory ahead of the company, Mamaearth seems to be on the right track for success in the BPC segment.