In a surprising turn of events, Mamaearth, the popular direct-to-consumer (D2C) unicorn, disclosed on Thursday (December 28) that one of its senior executives has flouted insider trading norms. According to a filing with the Bombay Stock Exchange (BSE), the parent company Honasa Consumer revealed that Shuchi Garg, the startup’s vice-president of sales, traded Mamaearth shares without obtaining prior approval from the company’s secretary or compliance officer.
The alleged violations are in direct contravention of the Code of Conduct under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. Mamaearth stated in its filing, “…We would like to inform you that one of the Designated Persons (Employee) of the Company has traded into the equity shares of the Company without obtaining preclearance of the Company Secretary and Compliance Officer of the Company.”
Mamaearth has issued a warning letter to Garg, directing her to refrain from such actions in the future. The matter is set to be discussed in detail during the company’s audit committee meeting, where a comprehensive action plan will be devised.
The regulatory filing outlines that the violations occurred across two separate transactions on December 12 and December 27. On December 12, Garg sold 2,000 shares of Honasa Consumer at INR 420 each, amounting to INR 8.4 Lakh. On December 27, she sold an additional 1,500 shares at a price of INR 457.16, totaling INR 6.85 Lakh. Both transactions, with a cumulative value of INR 15.2 Lakhs, were executed without the required pre-clearance.
According to SEBI rules, designated persons holding unpublished price-sensitive information are prohibited from participating in trading activities.
This incident follows reports from two months ago suggesting that Honasa Consumer employees were planning to sell shares worth at least INR 150 Crores in a block deal in November. However, the company later denied any such move, and no further information on the matter has been made available.
The company, which was listed at a 2% premium (INR 330) on the NSE, experienced a flat debut on the BSE at INR 324 in November. Since its listing, Mamaearth’s stock has surged by over 42% on the BSE.
In the past five trading sessions, Mamaearth shares have witnessed a nearly 13% increase, starting at INR 407.95 on December 21. The positive momentum is attributed to the company’s favorable Q2 FY24 financial results and a growing investor sentiment for new-age tech stocks.
Just last week, local brokerage firm JM Financial initiated a ‘BUY’ call on Honasa Consumer, citing a positive outlook and strong financial performance.
On Thursday (December 28), Mamaearth shares closed 0.22% lower at INR 460.35 on the BSE.
