Fireside Ventures to Offload 1.9% Stake in Mamaearth’s Parent Company Honasa Consumer

• ByStartupStory     |    December 5, 2023

Venture capital firm Fireside Ventures has announced plans to sell a 1.9% stake in Honasa Consumer, the parent company of Mamaearth, a direct-to-consumer (D2C) unicorn. The move is set to take place through multiple block deals scheduled for Tuesday, December 5.

According to CNBC Awaaz, Fireside Ventures aims to sell 61 lakh shares with a floor price ranging from INR 368.7 to INR 384.1 per share. At the upper limit, this amounts to a cumulative sum of INR 234 crore, while at the lower end, it implies a total of INR 224 crore. Kotak Securities has been designated as the broker for this deal.

Speculations arise that Fireside Ventures might be looking to capitalize on the current positive market sentiment, particularly as Mamaearth’s shares have experienced a downward trend in the past five trading sessions.

The decision to divest the stake comes shortly after reports surfaced indicating that Honasa Consumer had overstocked its offline distributors in anticipation of the startup’s public listing. This overstocking has reportedly left distributors in Maharashtra and Goa burdened with a 90-day inventory, compared to the usual 30 days.

Mamaearth went public on November 7, entering the stock market at a 2% premium on the BSE and settling at INR 324. However, market volatility led to a sharp decline, with the stock reaching a record low of INR 256.10 on the BSE just four days later. The company’s fortunes turned around after it released Q2 results for the fiscal year 2023, revealing a nearly doubled net profit of INR 29.4 crore compared to INR 15.2 crore in the same quarter of the previous year.

Following the positive Q2 results, the stock experienced a significant rally, reaching an intraday high of 20%. This boost was further fueled by a favorable endorsement from brokerage firm Jefferies, which initiated coverage on the stock with a BUY rating and set a target price of INR 520. Jefferies also estimated that Honasa Consumer was well-positioned to achieve a growth rate of 27% over the next three years.

Interestingly, recent reports had suggested that employees of Honasa Consumer were contemplating a block deal to sell shares worth INR 150 crore. However, the company swiftly refuted these claims, stating that no such plan was in progress.

On Monday, December 4, Honasa Consumer’s stock closed 4.04% lower at INR 383.50 on the BSE, adding another layer of intrigue to the unfolding dynamics within the company’s shareholder landscape.

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