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Womancart

• Womancart is coming out with an initial public offering (IPO) of 11,12,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 86 per equity share.
• The issue will open for subscription on October 16, 2023 and will close on October 18, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 8.60 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Nimisha Jain. 

Profile of the company

The company is primarily a digital consumer centric retail platform, providing wide range of classic and emerging branded beauty and wellness products for skin care, body care, hair care, fragrance for both men and women at the comfort of home. It also sells lifestyle brands for make-up, imitation jewellery, lingerie. It also run brick and mortar stores where customers can visit, make purchases, and interact with the brand. It has specially sourced products to cater to everyday needs from skin care, makeup products, fragrance, hair styling products and tools and a separate section for men and their grooming needs with shavers, trimmers and beard care. It provides easy shopping experience, good consumer service, high quality products and fashionable essentials from head to toe. Its product portfolio consists of approximately 10,000 SKUs from its own brand along with various national & international brands. 

Proceed is being used for:

• Meeting out the expenses on Branding and Marketing.
• Meeting the expenses on App Development.
• Meeting out the Working Capital requirements.
• Meeting out the General Corporate Purposes.
• Meeting out the Issue Expenses.  

Industry overview

The India beauty and personal care market size reached $26.3 Billion in 2022. Looking forward, IMARC Group expects the market to reach $38.0 Billion by 2028, exhibiting a growth rate (CAGR) of 6.45% during 2023-2028. The availability of a diversified product range, increasing demand for natural and organic products, and the growing penetration of e-commerce platforms represent some of the key factors driving the market. One of the major factors driving the market is the increasing awareness of beauty and personal care products among Indian consumers. With rising urbanization, individuals have become more likely to adopt new products and routines. This shift is supported by amplified exposure to global beauty trends due to the proliferation of social media platforms and influencer marketing. Moreover, as consumers become more aware of the importance of self-care and maintaining a good appearance, they are investing in beauty and personal care products. In addition to this, the rising affluent population and increasing spending capacity have led to an increase in demand for cosmetics, skincare, hair care, fragrances, personal hygiene products, and grooming tools.

There is a growing inclination toward natural and organic products as consumers are becoming more aware of the potential harm caused by chemicals and opting for products with natural ingredients. In response to this demand, numerous market players are offering vegan, paraben-free, fragrance-free, halal, and organic products, which are considered safer for the skin and overall health. There is also a shift towards products that offer health and wellness benefits, such as anti-aging and skin-brightening products. In addition to this, consumers are turning to online shopping due to the associated convenience and competitive pricing, along with the availability of a wide range of products from local and international players. Furthermore, India has a large and growing young population, which represents a key demographic of the market. A growing focus on sustainability in the beauty and personal care industry represents another key trend, with individuals opting for products that are eco-friendly and promote ethical practices. In addition, the rising pollution levels in Indian cities are driving consumers toward anti-pollution skincare and hair care products. Technology is also playing an increasingly important role with the rise of smart beauty devices and personalized skincare solutions. 

Pros and strengths:

Omnichannel approach: The company has a wide reach to its customers through online and offline methods. In order to provide ‘touch & feel’ experience of personal care products such as makeup and fragrances it has launched its physical stores at various places in Delhi. It strives to increase its store counts and provide a seamless offline-online experience in its physical stores, specifically designed to meet the needs of the contemporary Indian consumer. It is converting its warehouse located at A-3/264, Paschim Vihar, New Delhi-110026, into a retail store, which will be operational by the end of December 2023. In addition to this, it has initiated the process of opening a new warehouse at Model Town. 

Portfolio of owned brands: The company has a wide portfolio of its owned brands which includes jewellery, lingerie and clothing. Its owned brands play a key role in increasing the assortment of products for its consumers. It strives to increase the basket of its own brands based on its quality and cost effectiveness

Embracing Social Media and Influencer Partnerships: The company always tried leveraging its social media platforms to showcase products, share beauty tips, and engage with target audience. It has collaborated with young/upcoming influencers to promote its offerings, reaching a wider audience and building brand credibility.

Risks and concerns

Face competition: Existing online competitors may strengthen their market share through increased funding or industry consolidation, an increase in brand awareness or attractiveness to customers, or through financial or operational advantages which allow them to compete aggressively on pricing. Competition may also come from third-party suppliers establishing their own online presence as opposed to utilising its network. This may increase the cost of customer acquisition and lower margins due to pricing pressure. Its market share in the beauty and personal care segment may decline if competitors increase their focus on growing online sales through investment in the retail e-commerce market. 

Face potential risks related to payments: The company accepts payments through a range of methods, which include credit and debit cards, digital wallets, UPI, money transfers, and cash on delivery. Cash on delivery is a popular payment option for online purchases in India. However, returned purchases do not contribute to its revenue, and it bear the costs of return shipping fees, leading to increased operating costs that can have a negative impact on its business, financial condition, cash flows, and results of operations. Additionally, it faces the risk of fraudulent activity associated with cash on delivery, such as the use of counterfeit currency or fake identities for payment. Furthermore, for certain payment methods like credit and debit cards, it incurs expenses in the form of bank interchange fees and other charges. 

Requires substantial working capital: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards inventory. In its business, working capital is often required inventory management. In the event, it is are unable to source the required amount of working capital, it might not be able to efficiently satisfy the demand of its clients in a timely manner or at all. Even if it is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its products.

Outlook

Incorporated in 2018, Womancart is an online retail platform catering to a wide range of beauty brands and wellness products for skin care, hair care, and body care for both men and women. The company offers more than 100 skincare brands to its consumers. The company also has an offline store in Shalimar Bagh in Delhi opened in April 2022. The company established its 4 subsidiaries which acquired running online businesses listed on online website.  The company also has launched its own beauty brands such as Wondercurve, Sayda Jewels, Faeezah & Feya. On the concern side, the company derives its revenue from the beauty and personal care market which is subject to on-trend, and style specific customer preferences. Customer spending in this segment is primarily discretionary in nature, as is generally the case with the retail e-commerce market, and customers may allocate this discretionary spend across different product categories or other services from time to time. As a result, its growth will be impacted as so its profitability.

The company is coming out with an IPO of 11,12,000 equity shares of Rs 10 each at a fixed price of Rs 86 per share to mobilize Rs 9.56 crore. On performance front, total Income for the period ended March 31, 2023, stood at Rs 87,494.78 Thousand whereas in Financial Year 2021-22 it stood at Rs 42,566.60 Thousand representing an increase of 105.55%. The company’s Restated profit after tax increased significantly by Rs 2,626.91 Thousand from Rs 2,074.13 Thousand in FY ended March 31, 2022 to Rs 4,701.03 Thousand for the FY ended March 31, 2023, representing an increase of 126.65%. Meanwhile, with the combination of data analysis and customer insights, it intends to offer personalized recommendations and targeted promotions. It would be implementing features that allow customers to create profiles, save favorites, and receive tailored recommendations based on their beauty preferences and purchase history. It would be investing in mobile app development to provide a convenient and optimized shopping experience for customers on the go.