Honasa Consumer down 6.1% after 2.06 mn shares change hands via block deals

Peak XV Partners, Sequoia Capital, Redwood Trust, Fireside Ventures, Stellaris Ventures, and Sofina Ventures were the likely sellers

Shares of Honasa Consumer, the parent company of personal care brand Mamaearth, slipped 6.1 per cent on the BSE on Thursday, September 12 after multiple large deals on the counter. The identity of the buyers and sellers could not be immediately ascertained.

At around 10:28 AM, shares of Honasa Consumer were down 5.13 per cent at Rs 495.2 per share on the BSE. In comparison, the BSE Sensex was up 238.52 points at 81,761.68.

As per BSE data, around 2.06 million shares had changed hands in morning deals, with reports suggesting Peak XV Partners, Sequoia Capital, Redwood Trust, Fireside Ventures, Stellaris Ventures, and Sofina Ventures, among others, as the likely sellers.

That apart, global brokerage firm Jefferies initiated coverage on Honsasa Consumer on August 12, with a 'Buy' call and a target price of Rs 570 per share.

The brokerage sees two major levers to fuel the 2.5x revenue growth and doubling of Earnings before interest, tax, depreciation and amortisation (Ebitda) margins over FY24-30 for Honasa Consumer.

The first is the scaling up of the portfolio of brands under the derma skin care stable, including 'The Derma Co' and 'Aqualogica', to replicate the successful scale up of the ‘Mamaearth’ brand. 

Secondly, analysts at Jefferies see growth opportunities for the company ahead as Honasa doubles its offline distribution to 400,000 retail outlets through FY27.

"We expect Ebitda margins to increase from 7.1 per cent in FY24 to 10.2 per cent in FY27 and a further 14 per cent by FY30, as the new brands scale up and turn profitable," said Jefferies.

JM Financial has also maintained its 'Buy' recommendation on Honasa Consumer for a target price of Rs 505 per share in its earnings review report.

"From a long term perspective, the story of Honasa Consumer remains intact on the back of the offline scale up of Mamaearth, faster ramp up in newer brands, and margin expansion with scale efficiencies kicking in," the report stated.

In the past one year, shares of Honasa Consumer have gained 54.8 per cent, compared to the BSE Sensex's rise of 21.2 per cent during the same period.