Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks!

Today we’re diving into -
- Ambani’s deal to buy-out Hotstar from Disney,
- Mamaearth’s overvalued IPO,
- And, Ather’s quality-first rebound.

Our read time today is 4 minutes and 58 seconds - faster than your friends looto the Maggi from your lunchbox.

Let's dive in. 👇

Market Vibe Check

Reliance closes in on a deal to buy Disney’s India business out. 📽️

TLDR -
- Disney’s India unit is gonna see revenues dive by $400mn and profits cut by 50%.
- They’ve neared a deal with Mukesh Ambani to cut losses and sell the business.
- Disney’s targeting a valuation of $10bn, Reliance wants $7-8bn.

The last few months have been nothing but pain for Disney’s India unit.

- They lost streaming rights to the IPL (and cricket = religion in India)
- Over 15 million subs left their platform
- Their avg. revenue per user declined to an all-time low of just $0.59/month (compared to their global avg of $4.44/month)
- Group-wide revenues are expected to tank by $400 million this year.
- Profits are effectively gonna halve too.

Disney doesn’t wanna fight a losing battle, so they’re trying to cut losses and move on.

The craziest part - they’re selling to none other than Mukesh Ambani, the very guy who’s been putting them out of business in the first place.

Now it’s up to the lawyers and management to hammer out a good price. Disney think it’s India business is worth $10 billion while Motabhai will be insisting on a price in the $7-8 billion range.

There were a lot of folks who called Ambani crazy for paying 28000 Cr for IPL rights, and then making it free for everyone, but it looks like he’s having the last laugh.

Mamaearth preps for a monster IPO. 🧼

TLDR -
- Mamaearth is going public at a $1.2-1.4bn valuation.
- They’ll be issuing 400cr of new shares, and selling 4680cr of existing ones.
- Proceeds will go toward building brand equity by pushing hard on physical retail and bolstering product offerings.

Price is what you pay, value is what you get…

Earlier this year, Mamaearth filed their documents to go public on the stock markets.

But it was at a 1000X+ profit multiple and a $2 billion market cap.

Mamearth’s investors realised that if a company went public at a price that inflated, it would come crashing down.

So they went back to the drawing board, raised a $1.5bn round to give existing investors liquidity, and are now approaching public markets with a $1.2-1.4bn market cap.

There will be a fresh issue of 400 crore’s worth of shares, and an offer for sale totaling 4,680 crores.

Most of the money raised is gonna go back into the business (since all the private profit-taking happened last month).

Mamaearth needs to build some serious brand equity and is gonna be setting up lots of new branded outlets, investing in it’s salon arm BBlunt, and stocking up for some small buyouts.

Only Mr. Market can decide what to do with this one…

Ather’s troubles seem to start fading. ⚡

TLDR -
- Electric scooter startup Ather Energy has had to delay their unicorn round.
- They were gonna raise $250mn at a $1.3bn valuation, now they’ll do it over 2 tranches.
- Investors are concerned that government withdrew a multi-million dollar subsidy on battery packs.

If you want to do business in India, you have to listen to what regulators are saying.

And this time, the law put a dent in Ather’s billion-dollar dreams.

For the longest time, they were producing under the Indian government’s FAME scheme - which gave a decent subsidy to electric two-wheelers.

This helped them lower their production cost and sell below market price in India’s price-sensitive world.

But then, government decided to cut the subsidy.

And here are their EV sales numbers -
- Jan: 9,226
- Feb: 12,184
- Mar: 15,420
- Jun (subsidy cut on Jun 1): 4,597
- Jul: 6,692
- Aug: 5,092
- Sep: 7,109
- Oct: no full data, but 6,500+ so far!

This put them in a bit of a mess - their business fell almost 70-75% from it’s peak and profits were strained very heavily.

They’re one of the rare Indian automotive makers who focuses on quality over scale, which is why their success is gonna be good for the entire ecosystem.

It looks like a bit of a rebound is in store, but time will tell where this one goes.

In other news… ☕

Bombay starts rivalling Delhi… in air pollution (BBG)

Trevor Milton forced to hand over $165mn to Nikola (TC)

Microsoft’s AI edge starts to pay off (FT)

S&P cuts Israel’s credit rating to “negative” (Mint)

Peak XV’s Surge gets flooded with AI startups (Inc42)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai