Honasa Consumer stock hits 10% upper circuit after co-founder ups stake

According to reports, promoter Varun Alagh increased his stake in the company to 31.93 per cent.

Shares of the parent company of personal care brand Mamaearth, Honasa Consumer hit the 10 per cent upper circuit at Rs 287.85 in intra-day deals on Wednesday following reports that one of its co-founder has increased stake in the company.  At 10.40 AM, Honasa Consumer stock was locked at the per cent upper limit on nearly 4-fold jump in trading volumes at 4.30lakh shares as against the 2-week average volume of around 1.31 lakh shares on the BSE. There were pending buy orders for over 60,000 shares on the oldest stock exchange. In comparison, the BSE Sensex was up 0.4 per cent or 300 points at 81,145 levels.  As per reports, co-founder Varun Alagh has increased his stake in Honasa Consumer to 31.93 per cent by investing Rs 4.50 crore. An investment by promoter/ co-founder is often interpreted by market as a sign of strong confidence in the company's future prospects.  As per the shareholding pattern available on the BSE, the promoters including Varun Alagh and 5 others collectively held 34.98 per cent or 11.36 crore equity shares in the company.  Honasa Consumer has witnessed a tumultuous ride on the bourses in the last fortnight after the company announced its quarterly earnings. The stock had plunged as much as 40 per cent in mere four trading sessions post Q2 results to hit a fresh 52-week low at Rs 223.  At present, the stock seems to have recovered 29 per cent from the lows. The recovery at the counter was partly attributed to the company's clarification issued regarding AICPDF claims.  In an exchange filing on November 21, the company said it denied the recent misinformation being spread by All India Consumer Products Distributors Federation (AICPDF) around the company’s practices with its distributors and distribution transition.  According to reports, the AICPDF had flagged the large unsold inventory of the company lying with distributors and retailers. According to AICPDF, the unsold inventory is reportedly causing a financial burden of Rs 300 crore.  Meanwhile on the earnings front,  Honasa Consumer reported a net loss of Rs 19 crore for the second quarter ended September 2024 (Q2FY25) due to weak operational performance. The company had posted a net profit of Rs 29 crore in a year ago quarter.  Honasa's revenue from operations decreased 6.9 per cent year-on-year (YoY) at Rs 462 crore when compared with Rs 496 crore in a year ago quarter.