Employees of Honasa Consumer, the parent entity of Mamaearth, are reportedly contemplating the sale of shares worth INR 150 crore in a block deal set to take place this week.
According to CNBC-Awaaz, the workforce is anticipated to divest a pool of 31 lakh Employee Stock Ownership Plan (ESOP) shares at a discount ranging from 5% to 7% off the present market price.
According to the company’s disclosure, Honasa has issued stock options through two schemes, namely ESOP 2018 and ESOP 2021.
This development coincides with a significant surge in Mamaearth’s stock price over the past week. The shares experienced a notable increase of over 43% last week, propelled by favorable financial results for Q2 FY24.
The stocks are currently trading nearly 47% above the listing price from earlier this month. At the close of Friday’s trading session, Mamaearth recorded a 12.5% increase, reaching INR 475.1 on the BSE.
Should the block deal transpire, it is anticipated that the stock will undergo a correction.
It is noteworthy that Mamaearth’s IPO garnered significant interest from its employees, with their reserved portion being oversubscribed by 4.88 times. This marked the second-highest subscription rate, trailing only the QIB category, which saw a subscription of 11.5 times.
Read More: Mamaearth’s IPO sees remarkable 7.61x oversubscription, fueled by strong demand from QIBs
In Q2, Mamaearth disclosed a profit after tax (PAT) of INR 29.4 crore, reflecting a substantial year-on-year (YoY) increase of nearly 94%. Additionally, in the first half of FY24, the company reported a profit of INR 54.1 crore, a significant turnaround from the net loss of INR 151 crore incurred in FY23.
During the September quarter, the company significantly reduced its employee benefit expenses, primarily because the vesting conditions of Employee Stock Ownership Plans (ESOPs) for numerous Momspresso employees (a former subsidiary of Mamaearth) were not met due to the closure of the business.
In a recent research note, Jefferies labeled Honasa as a remarkable exception among digital-first beauty and personal care brands in India, citing its exceptional scale, profitability, and capital efficiency.
The brokerage anticipates that the company will achieve industry-leading revenue growth in the upcoming years, accompanied by an enhancement in profitability. Nevertheless, it noted that the intensifying competition in the beauty and personal care (BPC) sector would necessitate continuous innovation from the company.