Honasa Shares Rally 10% After Founder Varun Alagh Raises Stake

SUMMARY

Shares of Honasa rallied 10% to INR 287.85 apiece on the BSE during the intraday trading session today (December 4)

This comes at a day after Varun Alagh raised his stake in the company to 31.93%

In a filing with the stock exchanges, Honasa Consumer said that CEO Alagh bought additional stake in the Delhi NCR-based company for INR 4.5 Cr.

Shares of Mamaearth’s parent company Honasa rallied 10% to INR 287.85 apiece on the BSE during the intraday trading session today (December 4) after founder Varun Alagh raised his stake in the company to 31.93%.

In a filing with the stock exchanges, Honasa Consumer said that CEO Alagh bought additional stake in the Delhi NCR-based company for INR 4.5 Cr.

With his stake increasing to 31.93% from 31.88% earlier, promoters Ghazal Alagh and Varun now have a 35% shareholding in Honasa.

The stake purchase by Alagh comes at a time when Honasa and its flagship brand Mamaearth are said to have hit the growth wall and a freefall in the stock’s price has spooked investors. On a year-to-date basis, the stock has tanked over 32%.

At the time of writing, the company’s market capitalisation stood at INR 9,350.06 Cr (around $1.1 Bn).

Honasa posted a consolidated net loss of INR 18.6 Cr in Q2 FY25. The company reported a net profit of INR 29.4 Cr in the year-ago quarter and INR 40.3 Cr in the preceding June quarter.

This comes at a time when Honasa has seen a rollercoaster of highs and lows in the past six months.

The company, which posted an annual revenue mark of INR 2,000 Cr in FY24, turned cash flow negative with the first six months of FY25 (April to September) seeing a 7% revenue decline YoY.

Amid this, the company also lost its unicorn tag. Honasa is also facing issues with its distributors due to project Neev, which was introduced in 2023.

Last month, the All India Consumer Products Distributors Federation (AICPDF) alleged that the large unsold inventory of Honasa Consumer is lying with distributors and retailers, saying it is causing a financial burden of INR 300 Cr.

Back then, one of the distributors told Inc42 that Honasa’s practices were causing significant challenges with inventory management.

“The company was dumping products in our warehouse. While our monthly sales were around INR 15 Lakh, we were holding stocks worth INR 85 Lakh,” the distributor added.

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