honasa consumer bulk deal: Fireside Ventures sells 1.9% stake in Honasa Consumer for Rs 230 crore.

Venture capital fund Fireside Ventures sold a portion of its stake in Mamaearth’s parent company, Honasa Consumer, in a block deal on Tuesday. Fireside Ventures sold 1.9% stake in the company for Rs 378 each. Through the sale, the VC fund raised about Rs 230 crore. As of the end of September, Fireside held a 7.57% stake in the company.

Meanwhile, Norges Bank gained 0.77% on Honasa Consumer thanks to Government Pension Fund Global, according to exchange data.

Mamaearth, which recently planned an IPO, quietly debuted on the stock exchange. At the time of listing, the stock fell another 21% as investors shrugged off its steep valuation.

However, the stock has since recovered thanks to a ‘buy’ tag from Jefferies and healthy earnings in the September quarter.

Driven by higher sales volumes, Honasa’s quarterly revenue rose 21% year-on-year to Rs 496 crore, while EBITDA margin hit a record high of 8.1%, up 170 bps year-on-year.

The company’s management is confident that it will achieve sales growth of more than 30% in the future, just as it did in the first half of the year. Additionally, Ebitda margins are expected to continue to improve year-over-year over the next few years, driven by operating leverage and optimization of advertising spend.

Vivek Maheshwari, analyst at Jefferies, said, “We have upgraded FY24-26e Ebitda and EPS by 5-6%. We value Honasa at 6 times its September 25 EV/Sales and target price at Rs 520 from Rs 530. “We raised it a little bit,” he said.

Honasa Chairman and CEO Varun Alagh said the business grew 33% year-on-year in the first half of 2024. This is 3.8 times the median growth rate of Indian FMCG companies.

Although the exact division was not disclosed, new brands led the growth, while Mamas also recorded double-digit growth in the first half of the year. Within the new brands, The Derma Co currently has an annual revenue run rate (ARR) of Rs 380 crore and Aqualogica has an annual revenue run rate (ARR) of Rs 180 crore. Dr. Sheth has grown 30x since the acquisition, becoming the fourth brand to cross Rs 150 crore ARR. BBlunt’s product business has also tripled since the acquisition.

“Management noted on June 22 that the base of the second quarter was strong as the ERP implementation had shifted some revenue from the first quarter of last year to the second quarter. So H1 performance is a better indicator, with Honasa down 33% YoY (36 % LFL) growth, with offline ERP implementations having a greater impact on channel revenue,” Jefferies said.