Mamaearth employees may sell ESOP shares worth ₹150 crore via a block deal: Report

Employees at Mamaearth's parent company Honasa Consumer Care are expected to sell shares this week for about ₹150 crore, sources told CNBC-Awaaz, adding that the block deal is probably going to be carried out at a 5–7% discount to the current market price of ₹477.10.

The deal's broker is Kotak, and the block is expected be an ESOP (employee stock ownership plan) pool of roughly 31 lakh shares, CNBC-Awaaz reported. Honasa Consumer shares have increased by more than 47% since listing compared to the ₹324 issue price. 

Mamaearth share price was locked at 20% upper circuit on November 23 after the company reported its financial results for the quarter ended September 2023, its first quarterly earnings after the company got listed on the bourses. Mamaearth shares rallied 20% to a fresh high of ₹422.50 apiece on the BSE.

Honasa Consumer, the parent company of digital skincare firm Mamaearth, reported a net profit of ₹30 crore in Q2FY24, which doubled from the same period last year. Its revenue from operations grew 21% to ₹496 crore.

The direct-to-consumer (D2C) unicorn’s revenue grew 33% in the first half of FY24 when the median growth of the fast-moving consumer goods (FMCG) industry stood at 9%.

Honasa Consumer continues to operate at a negative working capital of minus 5 days in H1FY24. The company’s offline distribution increased 47% YoY to 1,65,937 outlets.

Honasa Consumer’s Q2 EBITDA grew 53% YoY to ₹40 crore, which was 25% above Jefferies’ estimates, aided by a one-off reversal of ESOP costs due to the scale-down of the Momspresso business. Adjusted for this, EBITDA grew 35% YoY, 11% above estimates. The beat was led by better margin expansion, even as revenue was in line.

EBITDA margin expanded 170 bps YoY to 8.1%, its highest ever. Foreign brokerage Jefferies said Honasa Consumer reported a strong Q2 on both topline and margin.