Founder Varun Alagh buys shares in Mamaearth parent firm Honasa Consumer; increase stake to 31.93%

Ghazal and Varun Alagh, founder of Honasa Consumer

Varun Alagh, co-founder and CEO of Honasa Consumer, the company that runs brands like Mamaearth and others, has bought shares worth Rs 4.5 crore in the beauty and personal care firm, stock exchange filings on December 3 showed.

Alagh, who previously held a 31.88 percent stake in the company, now holds 31.93 percent in the firm. CEO Alagh started the company along with his wife Ghazal Algh, who holds 3.07 percent ownership in the Gurugram-based company. Together, the husband and wife duo own 35 percent of Honasa Consumer, a rare sight in India’s startup ecosystem where founders typically hold lower stakes in order to raise funds.

CEO Alagh has bought shares at a time when the company is going through a major overhaul and its shares have lost sheen. On a year-to-date basis, the shares are down over 38 percent to trade at Rs 262.45 percent on the NSE at the close of day's trading on December 3.

The fall has largely come in the last few weeks after the company reported its first quarterly loss in five quarters in Q2FY25. In the July-September period, Honasa Consumer incurred a loss of Rs 19 crore, versus a profit after tax (PAT) of Rs 29 crore reported in the year-ago period, and also saw its revenue decline 7 percent from Rs 496 crore to Rs 462 crore on a year-on-year (YoY).

The drag was because the company took a hit of about Rs 70 crore in the quarter as it altered its offline business model to go from supplying to super stockists to directly dealing with distributors as it grows its offline presence and removes an additional layer in retail. Since the company removed one level of intervention, it was left with products that could not be sold further.

“Inventory was one reason. The second, we had a certain expectation in terms of how Mamaearth growth will pan out which has not panned out in line. We’re relooking at the investment allocation playbook, and more, to understand how the brand will move from here to what we had originally planned…those are the two main factors that did not go our way,” CEO Alagh had told Moneycontrol while adding that the company is working on solutions that will bring the brand back to its original pace in a few quarters.

Mamaearth is Honasa Consumer’s flagship label and accounts for 65 percent of the company's revenues because of which CEO Alagh is nursing the brand back to health.