Honasa Consumer Sees INR 238 Cr Block Deal, Stocks Tank After Early Gains

Shares of Honasa Consumer Ltd, which houses direct-to-consumer brands Mamaearth and The Derma Co, are currently trading in losses followed by a large block deal that took place shortly after the market opened on Tuesday (December 5).

Around 2% stake of the company or 62.90 Lakh shares exchanged hands on the block deal. The deal is valued at INR 238 Cr.

However, the buyers and sellers in the transactions are not known.

At 11:20 am, the shares were trading at INR 379 apiece on the BSE, 1% lower as compared to the previous close at INR 383.

Earlier it was reported that venture capital firm Fireside Ventures was planning to offload a 1.9% stake in Honasa Consumer via multiple block deals. The VC firm was planning to dump 61 Lakh shares at a floor price of INR 368.7 to INR 384.1 apiece.

The decision to sell the stake coincides with recent reports indicating that Honasa had accumulated an excess of stock with its offline distributors ahead of the startup’s public listing.

According to the reports, distributors in Maharashtra and Goa now find themselves burdened with a 90-day inventory, a significant increase from the typical 30-day stock levels.

D2C unicorn Mamaearth made its debut on the Indian stock exchange on November 7 with a nearly 2% premium on NSE. The shares were listed at INR 330, marking a listing gain of INR 6 over the issue price of INR 324. On the BSE, Mamaearth shares listed flat at INR 324.

Despite an optimistic start, market volatility dampened the initial enthusiasm, causing the stock to plunge to a historic low of INR 256.10 on the BSE merely four days later. However, a positive turn occurred as the company disclosed its Q2 FY24 results, revealing a substantial increase in net profits.

Mamaearth posted a profit after tax (PAT) of INR 29.4 Cr in Q2, registering almost a 94% jump year-on-year (YoY), while its operating revenue also increased 21% to INR 496.1 Cr.

Shares of Honasa Consumer Ltd jumped 20% during the intraday trading on November 23 to touch the upper band and a record high at INR 422.5 on the BSE following the company’s Q2 FY24 earnings announcement.