Sugar Cosmetics raises Rs 144.5 crore from A91 Partners as valuation falls sharply

Sugar Cosmetics has secured Rs 144.5 crore in fresh funding from existing investor A91 Partners, with the transaction placing the beauty company at an implied post-money valuation of around Rs 755 crore. The latest deal represents a substantial decline from the company’s peak valuation as it works through falling revenue and rising losses.

Sugar Cosmetics has raised fresh capital at a significantly lower valuation, highlighting the financial pressures facing the Indian direct-to-consumer beauty market.

The company has secured Rs 144.5 crore from existing investor A91 Partners, according to regulatory filings. The transaction values Sugar at an implied post-money valuation of approximately Rs 755 crore, considerably below the level reached during its earlier fundraising rounds.

The latest investment comes at a time when the cosmetics company is dealing with declining operating revenue and a sharp increase in losses.

A91 Partners invests Rs 144.5 crore in Sugar Cosmetics

Sugar’s board approved the allotment of 1,12,248 Series D7 compulsorily convertible preference shares to A91 Partners.

The shares were issued at Rs 12,871 each, with A91 Partners subscribing to the entire issue.

Following the transaction, A91 Partners is expected to own approximately 19.97% of Sugar Cosmetics.

The latest share issuance also establishes a new valuation benchmark for the company. Based on the transaction and its post-funding capital structure, Sugar’s implied valuation stands at around Rs 755 crore.

Sugar’s valuation falls significantly from its peak

The latest valuation represents a steep decline from Sugar Cosmetics’ previous peak valuation.

The company was valued at approximately Rs 3,000 crore in 2022, when it raised $50 million in a Series D funding round led by consumer-focused private equity firm L Catterton.

The latest valuation is therefore around 75% below the 2022 level.

The sharp reset reflects a considerably different funding environment for consumer and direct-to-consumer businesses compared with the period when investors were aggressively backing fast-growing digital-first brands.

Sugar had attracted considerable investor attention during the D2C boom, building its business around products aimed largely at younger Indian consumers.

Revenue falls while losses widen

The latest funding round comes after a challenging financial year for Sugar Cosmetics.

The company’s operating revenue declined by around 20% to Rs 404 crore in FY25, compared with approximately Rs 505 crore in FY24.

At the same time, its net loss almost doubled. Sugar reported a loss of around Rs 135 crore in FY25, compared with Rs 68 crore in the previous financial year.

The numbers point to pressure on both the company’s top-line growth and profitability.

For a consumer brand that previously benefited from rapid expansion in India’s beauty and personal-care market, the financial performance underlines the difficulty of maintaining growth while managing the costs associated with expansion.

From online-first brand to an omnichannel beauty business

Founded by Vineeta Singh and Kaushik Mukherjee, Sugar Cosmetics initially built its presence as an online-focused beauty brand.

The company later expanded its distribution through physical retail, adding offline stores alongside its own website and online marketplaces.

That expansion helped Sugar increase its physical presence and reach consumers beyond digital channels. However, operating a larger retail network can also increase expenses, making sustainable growth and efficient capital deployment increasingly important when sales growth slows.

Sugar’s product portfolio spans makeup and personal-care products, with the company positioning itself as a contemporary beauty brand for Indian consumers.

What the latest funding means for Sugar Cosmetics

The Rs 144.5 crore investment gives Sugar additional capital at a crucial stage of its business.

However, the transaction also highlights the gap between the company’s earlier valuation expectations and its current financial position.

The lower valuation does not necessarily signal the end of Sugar’s growth ambitions. Instead, it provides a fresh benchmark at a time when the company needs to balance expansion with improving financial performance.

The challenge ahead will be to translate the new capital into sustainable growth while addressing declining revenue and controlling losses.

For A91 Partners, which was already an investor in Sugar, the decision to provide additional capital indicates continued confidence in the brand’s long-term potential despite the substantial valuation reset.

Sugar Cosmetics enters its next phase

Sugar’s latest fundraise comes after a period in which India’s beauty industry has become increasingly competitive, with established companies, digital-first brands and newer startups competing for consumer spending.

The company now has fresh funding but at a valuation substantially below its 2022 peak.

Its ability to rebuild revenue growth, improve profitability and make its online and offline businesses work efficiently will likely determine how quickly Sugar can regain investor confidence.