Honasa: In the block deal, approximately 1.96% of the firm, or over 63 lakh shares, changed hands. The transaction is worth roughly 238 crore. The transaction’s buyers and sellers are presently unknown.
Honasa Consumer Ltd., the parent company of beauty and skincare business Mamaearth Ltd., is currently trading in the red after a massive block trade occurred after the market opened on Tuesday, December 5.
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In the block deal, approximately 1.96% of the firm, or over 63 lakh shares, changed hands. The transaction is worth roughly 238 crore. The transaction’s buyers and sellers are presently unknown. Sources stated on Monday that private equity company Fireside Investments was trying to sell a 1.9% stake in Honasa Consumer Ltd. At 10:41 a.m., the scrip was trading 0.55% down on the NSE at 382. On November 7, the company’s shares went public, trading at $324 per share. However, the stock has increased by 40% since its post-listing low of 275.
The primary cause behind the stock price increase
Honasa Consumer shares have risen dramatically since the business announced its quarterly profits. However, fundamentals are not the primary cause of the stock boom. Aside from reporting outstanding earnings in the September quarter and global brokerage company Jefferies anticipating a 36% increase in the stock price, another reason for the jump in stock price is a scarcity of accessible liquidity. According to publicly accessible information, Honasa Consumer has 32.17 crore shares outstanding.
1.18 crore shares of these outstanding shares are frozen for sale until December this year and January next year. Another 21 crore shares are set to be sold until May 2025. According to this information, just 7.56 crore shares, or 23.5% of the company’s outstanding equity, are now available for trading. The company’s topline increased by 21% to 496 crore in the second quarter, while EBITDA, or earnings before interest, tax, depreciation, and amortization, increased by 53.5% to 40.3 crore. The EBITDA margin increased by 170 basis points to 8.1%.
The quarter’s underlying volume growth was 27%. The comeback occurred after Jefferies began the first “conviction” buy on Honasa Consumer stock after it was listed. Jefferies set a price target of 520 on the company, representing a possible 36% upside from current levels. Honasa is expected to grow at an industry-leading 27% over the next three years, according to Jefferies.
The brokerage also anticipates double-digit profits by fiscal year 2026, owing to marketing spend optimization and scale benefits. According to Jefferies, the company’s BPC division would rise in the double digits, with sustained gains for its online channel. It also referred to Honasa’s preference for growth over profitability as the “correct strategy.”
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