Mamaearth Employees To Sell ESOPs Worth INR 150 Cr In A Block Deal

SUMMARY

Mamaearth employees are expected to sell an ESOP pool of 31 Lakh shares at a 5%-7% discount to the current market price this week

Shares of Honasa Consumer, the parent entity of Mamaearth, surged 43% last week after the company reported a 94% year-on-year jump in its profit after tax at INR 29.4 Cr in Q2 FY24

Following last week’s rally, the company’s shares are trading almost 47% higher from the price at which they listed on the stock exchanges earlier this month

Employees of Honasa Consumer, the parent entity of Mamaearth, are reportedly likely to sell shares worth INR 150 Cr in a block deal this week.

The employees are expected to sell an employee stock ownership plan (ESOP) pool of 31 Lakh shares at a 5%-7% discount to the current market price, CNBC-Awaaz reported.

As per the company’s disclosure, Honasa has granted stock options under two schemes – ESOP 2018 and ESOP 2021.

The development comes amid a sharp jump in Mamaearth’s share price in the last week. Its shares gained over 43% last week following positive Q2 FY24 financial results.

The shares are trading almost 47% higher from the price at which they listed on the stock exchanges earlier this month. On Friday, Mamaearth ended the trading session 12.5% higher at INR 475.1 on the BSE.

If the block deal takes place, the scrip is expected to witness some correction.

It is pertinent to note that Mamaearth’s IPO saw massive interest from its employees as the portion reserved for them was subscribed 4.88X. It was the second highest subscribed portion following the QIB category, which was subscribed 11.5X.

Mamaearth reported a profit after tax (PAT) of INR 29.4 Cr in Q2, a jump of almost 94% year-on-year (YoY). Also, compared to a net loss of INR 151 Cr in FY23, the company reported a profit of INR 54.1 Cr in H1 FY24.

The company cut its employee benefit expenses sharply in the September quarter as the vesting conditions of ESOPs of several Momspresso employees (a former Mamaearth subsidiary) were not fulfilled due to the shutdown of the business.

Jefferies, in a recent research note, called Honasa a notable outlier among digital-first beauty and personal care brands in India from the standpoint of scale, profitability, and capital efficiency.

The brokerage expects it to deliver sector-leading revenue growth over the coming years, coupled with improving profitability. However, growing competition in the beauty and personal care space (BPC) space would also require the company to constantly innovate, it said.