Fireside Ventures sells 1.9% stake in Honasa Consumer for Rs 230 crore

Venture capital fund Fireside Ventures sold partial stake in Mamaearth parent Honasa Consumer through bulk deals on Tuesday.

Fireside Ventures has offloaded 1.9% stake in the company at Rs 378 apiece. Through the sale, the VC fund bagged about Rs 230 crore. As of September end, Fireside held 7.57% in the company.


Meanwhile, Norges Bank on account of The Government Pension Fund Global has picked up 0.77% in Honasa Consumer, according to exchange data.

Mamaearth, which recently came up with its IPO, made a muted debut at the bourses. On listing, the shares fell further 21% as investors looked away on steep valuations.

However, the stock recovered since then on Jefferies 'Buy' tag and healthy earnings in the September quarter.

Driven by volume growth, Honasa's quarterly revenue grew 21% YoY to Rs 496 crore while EBITDA margin expanded 170 bps YoY to 8.1%, highest ever.

The company's management remains confident of delivering a 30% plus revenue growth going forward, similar to that in H1. It also expects Ebitda margins to keep improving on a YoY basis over the coming years, led by operating leverage and further optimisation of ad-spends.

"We upgrade our FY24-26e Ebitda and EPS by 5-6%. We value Honasa at 6x Sep-25 EV/Sales and increase price target slightly to Rs 530 vs Rs 520 earlier," Jefferies analyst Vivek Maheshwari said.

Honasa chairman and CEO Varun Alagh said the business has grown by 33% YoY in H1 FY24, which is 3.8 times the median growth of FMCG companies in India.

While the exact split was not disclosed, growth was led by new brands, while Mamaearth also grew in double-digits in H1. Within new brands, The Derma Co is now at an annual revenue run-rate (ARR) of Rs 380 crore and Aqualogica is at Rs 180 crore. Dr. Sheth became the fourth brand to cross Rs 150 crore ARR, growing 30x since acquisition. BBlunt's product business has also grown 3x since acquisition.

"Management noted that Q2 had a high base as some revenue was shifted from Q1 to Q2 last year due to ERP implementation in June-22. H1 performance is hence a better indicator, wherein Honasa grew 33% YoY (36% LFL). Offline channel revenue was impacted more due to this ERP implementation," Jefferies said.