Sugar Cosmetics may raise Rs 140-150 crore at a Rs 500-600 crore valuation after revenue fell, marking an 80 percent drop from its 2022 peak and raising questions about D2C expansion overall.

Sugar Cosmetics may raise Rs 140-150 crore at a Rs 500-600 crore valuation after revenue fell. |

Mumbai: is raising Rs 140-150 crore from investor A91 Partners at a valuation of Rs 500-600 crore, according to an report.

The deal would mark a fall of more than 80 percent from the beauty brand’s peak valuation of around Rs 3,000 crore in 2022. Such a fundraise at a sharply lower value is commonly called a down round.

A91 Partners currently owns around 20 percent of Sugar Cosmetics and is expected to increase its stake through the transaction, the report said.

Revenue falls for two years

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’ revenue is estimated at Rs 300-350 crore in FY26, compared with Rs 404 crore in FY25 and Rs 505 crore in FY24. This means revenue may have fallen by around 31-41 percent from its FY24 level.

The company is also facing rising losses, tougher competition and financial commitments, including working capital debt, according to the report.

Expansion added pressure

Sugar grew from an online cosmetics business into an offline brand. It expanded its portfolio through brands such as skincare label Quench, Sugar Pop and Enn Beauty.

However, adding products and stores requires more stock, marketing, staff and working capital. If sales do not grow fast enough, these expenses can put pressure on cash flow and widen losses.

What the company says?

Sugar Cosmetics said the fresh capital would create working capital capacity for growth, especially to support momentum in Quench.

The funding can therefore give the company money to manage operations and rebuild growth. However, the steep valuation cut shows that investors are now placing greater importance on revenue, profitability and cash use.

Lesson for D2C companies

Sugar’s situation highlights a lesson for direct-to-consumer brands. Rapid expansion alone cannot create a strong and stable business. Companies must control costs, earn enough from each sale and build a path to profit.

When funding becomes harder to secure, weak economics can quickly reduce valuation and force founders to raise money on less favourable terms.

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