Shares of Honasa Consumer Limited, the parent company of popular FMCG brands including Mamaearth, are expected to be in the spotlight following a significant promoter stake increase. Co-founder Varun Alagh acquired additional equity shares worth ₹50.00 crore through a bulk deal transaction on December 30, purchasing shares from Bengaluru-based venture capital firm Fireside Ventures.

Bulk Deal Transaction Details

The transaction involved the purchase of 18.52 lakh equity shares through a bulk deal mechanism, with each share priced at ₹270.00. This represented a minor premium of 0.60% over the previous closing price of ₹268.45 on the National Stock Exchange. The deal demonstrates continued promoter confidence in the company's growth prospects.

Updated Shareholding Structure

Following this acquisition, there has been a notable change in the company's shareholding pattern. Varun Alagh's individual stake has increased to 32.45% from 31.88%, while Fireside Ventures' holding decreased to 1.36% from 1.93%. Prior to this transaction, Alagh held approximately 10.37 crore shares. The overall promoter group holding has strengthened with Ghazal Alagh, Varun's wife, also holding 3.06% equity as a promoter.

Strong Financial Performance

Honasa Consumer demonstrated robust financial performance in the second quarter, marking a significant turnaround from the previous year. The company reported like-for-like revenue of ₹566.00 crore, reflecting 22.50% year-on-year growth, while operating revenue stood at ₹538.00 crore, up 16.00% year-on-year. The company achieved a consolidated net profit of ₹39.00 crore, compared to a net loss of ₹18.00 crore in the corresponding quarter of the previous year.

Market Performance and Brand Portfolio

Despite strong operational performance, the stock remains 15.00% below its IPO issue price of ₹324.00 since its listing in November 2023. The stock exhibits volatility with a 1-year beta of 1.10, reflecting its sensitivity to market movements. Honasa Consumer operates a portfolio of digital-first beauty and personal care brands including Mamaearth, The Derma Co., and Aqualogica, with growth driven by focus categories and sustained product innovation.

This bulk deal transaction represents a significant vote of confidence from the company's co-founder in the business prospects, particularly given the strong topline performance driven by growth in focus categories across the digital-first beauty and personal care company's brand portfolio.

HSBC has downgraded Mamaearth parent company Honasa Consumer Limited to a 'Reduce' rating, signaling a bearish outlook on the consumer goods firm. The global investment bank has set a target price of ₹242.00 per share for the stock.

Brokerage Recommendation Details

The downgrade to 'Reduce' indicates HSBC's expectation that Honasa Consumer's stock may underperform relative to the broader market. This rating typically suggests that investors should consider reducing their exposure to the stock or avoid new positions.

Market Implications

The revised rating from HSBC represents a cautious stance on Honasa Consumer's near-term performance prospects. Reduce ratings are generally issued when brokerages identify potential headwinds or challenges that could impact a company's stock performance.

Investors in Honasa Consumer will likely monitor the stock's movement in response to this rating change, as brokerage recommendations often influence trading sentiment and institutional investment decisions in the market.