SUGAR Cosmetics Raises ₹144.5 Crore as Valuation Falls 75%
SUGAR Cosmetics has raised ₹144.5 crore from existing investor A91 Partners in a fresh equity round that values the direct-to-consumer beauty brand substantially below its previous peak. The latest transaction comes as SUGAR deals with falling revenue, widening losses and the financial pressure created by its rapid expansion into physical retail.
The company allotted 112,248 Series D7 compulsorily convertible preference shares to A91 Partners at ₹12,871 per share, with A91 subscribing to the entire issue. Based on the post-transaction capital structure, Moneycontrol estimated an implied valuation of around ₹755 crore, roughly 75% below the nearly ₹3,000 crore valuation SUGAR commanded in 2022. Other reports, including Inc42, have estimated the latest valuation closer to ₹550–600 crore, making the exact markdown dependent on the valuation methodology used.
A91 Partners Increases Its Bet
A91 Partners was already an investor in SUGAR and is expected to hold around 19.97% of the company following the latest share allotment. The new capital gives the beauty brand additional funding at a time when its financial performance has weakened considerably.
The transaction is effectively a down round, meaning new shares are being issued at a valuation lower than that of an earlier financing round. For SUGAR, the reset is significant because the company had once been valued at around ₹3,000 crore during the 2022 funding boom.
Revenue Falls While Losses Rise
SUGAR's FY25 performance shows why investors have reassessed the company's valuation. Operating revenue declined about 20% year over year to ₹404.4 crore from ₹505.1 crore in FY24.
At the same time, the company's net loss nearly doubled to ₹135 crore from ₹68.4 crore. EBITDA losses also more than doubled to approximately ₹116 crore, according to filings cited by Inc42. The company has yet to report its FY26 financial performance.
The financial pressure has been linked partly to SUGAR's aggressive offline expansion. The company had invested heavily in physical stores alongside its online and marketplace presence, increasing its operating costs at a time when the broader D2C market was becoming more competitive.
From D2C Success to a Valuation Reset
Founded by Vineeta Singh and Kaushik Mukherjee, SUGAR Cosmetics started as an online-first beauty brand and built a strong following among younger Indian consumers. It later expanded across e-commerce platforms, its own website and physical retail stores.
The company became one of the better-known brands to emerge from India's D2C boom. In 2022, it raised $50 million in a Series D round led by L Catterton at a valuation of roughly $400 million, equivalent to around ₹3,000 crore at the time.
The latest transaction places that earlier valuation in stark contrast with the company's current fundraising benchmark. Even using the higher ₹755 crore estimate, SUGAR's implied value has fallen by about three-quarters from its 2022 peak.
Fresh Capital Comes With Pressure to Turn Around
The new funding gives SUGAR additional capital to stabilize its operations and pursue its next phase of growth. But the investment also comes with a much lower valuation benchmark, putting greater pressure on the company to improve its underlying financial performance.
SUGAR's co-founder and CEO Vineeta Singh has pushed back against criticism surrounding the valuation cut, saying that she and co-founder Kaushik Mukherjee remain focused on building the company for the long term.
The company's challenge now extends beyond raising capital. It needs to restore revenue growth, reduce losses and improve the economics of its retail network while competing with established beauty companies and newer digital-first brands.
SUGAR's latest funding round also reflects a wider change in India's startup market. Investors have become more selective about consumer and D2C businesses, with revenue quality, margins and a path to profitability carrying greater weight than the rapid expansion and high valuations seen during the earlier funding cycle.
For SUGAR, the ₹144.5 crore investment provides fresh financial support, but the steep valuation reset shows how much investor expectations have changed since the company's peak. Its ability to turn its established brand and retail presence into sustainable growth will determine whether the company can rebuild the valuation it once commanded.
