Honasa Consumer shares drop 4% despite report of ESOP sale denial

Shares of Honasa Consumer Ltd fell over 4 per cent in Tuesday's trade, even as the company reportedly said no Employee Stock Ownership Plans (ESPO) sale was likely this week, as suggested by a report by CNBC-Awaaz. The CNBC-Awaaz report had earlier suggested that employees of the companies were looking to sell ESOPs worth Rs 150 crore and that at a 5-7 per cent discount to the Friday's closing price.

Moneycontrol later reported Honasa saying in an email statement: "There is no block deal that’s happening on ESOPs."

Honasa Consumer shares, which soared 12.45 per cent to settle at Rs 475.10 on Friday, fell 4.5 per cent to hit a low of Rs 453.70 on BSE, before recovering some group. At 9.24 am, the scrip was trading at Rs 461.10, still down 2.95 per cent.

The Mamaearth stock, which got listed on November 7, is up 47 per cent from its issue price of Rs 324.

A total of 17,78,000 Honasa shares changed hands in five block deals at an average rate of Rs 403 of last week, Nuvama Institutional Equities suggested. The block deals were worth Rs 72 crore, the brokerage said. The scrip soared 43 per cent for the week.

The scrip was in news recently after the Mamaearth parent logged a 94 per cent year-on-year surge in bottom line at Rs 29 crore for the September quarter. The largest digital-first beauty and personal care company said its top line for the quarter grew 21 per cent YoY to Rs 496 crore. The like-for-like growth of continuing business stood at 24 per cent, the company said in a BSE filing. The sales growth was aided by a 27 per cent YoY jump in volumes, Honasa Consumer said in a BSE filing.

Following this, Jefferies upgraded its earnings per share estimate by 5-6 per cent for Honasa Consumer on strong top line and margin and as a result upped its target price for the stock to Rs 530 from Rs 520 earlier.

"While there was a growth deceleration from June quarter, the Honasa management attributed this to ERP changeover and hence, H1 growth of over 35 per cent reflects the true picture. New brands are scaling up well, with Dr Sheth now the fourth brand to cross Rs 150 crore ARR," Jefferies said in a note.

Honasa Consumer deals in beauty & personal care (BPC) segment. Analysts noted that Honasa has the playbook in place for its relatively recently-incubated/acquired brands, which are seeing faster growth. The company has expedited its offline sales with intent to reach a wider audience, gain predominance and drive scale, analysts said.

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