05-Dec-2023
2 mins read
Fireside Ventures, a significant shareholder in Honasa Consumer, the parent company of Mamaearth, is going to conduct a strategic offloading of a 1.9% stake through multiple block deals scheduled for December 5. This move stands out amidst a buoyant market atmosphere, signalling potential profit booking by the VC firm.
The planned sale involves 61 lakh shares with a proposed floor price range of Rs 368.7 to Rs 384.1 per share. This pricing scheme, at the upper limit, signifies a cumulative value of Rs 234 crore, while at the lower end, it implies a total of Rs 224 crore.
Designated Broker
Kotak Securities has been appointed as the broker for facilitating these transactions, underscoring the careful orchestration of this pivotal stake sale.
Market Trends and Stock Performance
Amidst recent market fluctuations, Mamaearth’s shares encountered a downward trajectory, particularly in the last five trading sessions. Notably, the stock commenced trading on November 7 at a 2% premium on the BSE, commencing at Rs 324. However, the initial enthusiasm swiftly dissipated, with the stock plunging to a low of Rs 256.10 on the BSE merely four days later, influenced by market volatility.
Recent Company Performance
The resurgence of Mamaearth’s stock followed the release of its Q2 FY24 results, showcasing a notable upswing in net profits. The figures soared, nearly doubling to Rs 29.4 crore in Q2 FY24 compared to Rs 15.2 crore in the corresponding period of the previous year, instigating a substantial 20% intraday high post-results.
Market Sentiments and Sales Strategy
Fireside Ventures’ decision to divest a portion of its stake is particularly noteworthy given the recent reports of Honasa Consumer’s overstocking of offline distributors before the company’s public listing. This surplus inventory has led to distributors in Maharashtra and Goa being burdened with stockpiles lasting 90 days, a significant deviation from the usual 30-day inventory cycle.
Strategic Considerations
The impending stake sale might align with Fireside Ventures’ strategic agenda to capitalise on the market positivity while optimising its investment portfolio. This manoeuvre emerges amidst both broader market trends and the company-specific dynamics of Mamaearth’s parent firm, influencing the decision to offload part of their holdings.
In summary, the proposed block deals by Fireside Ventures to sell a 1.9% stake in Honasa Consumer reveal a nuanced response to prevailing market conditions and company-specific performance indicators. As the market awaits the execution of these transactions, the strategic implications for both Fireside Ventures and Honasa Consumer are poised to unfold against the backdrop of evolving market sentiments and corporate strategies.