Mamaearth Sr Exec Flouts Insider Trading Norms, Sells Shares Worth INR 15 Lakh In Two Tranches

D2C unicorn Mamaearth on Thursday (December 28) informed the bourses that a senior executive of the company flouted insider trading norms. 

In a filing with the BSE, Honasa Consumer, Mamaearth’s parent, said that the startup’s vice-president of sales, Shuchi Garg, allegedly traded shares of the company without prior approval from the company secretary or compliance officer. 

The violations pertained to the Code of Conduct under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

“…We would like to inform you that one of the Designated Person (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,” Mamamearth said. 

In the meantime, the unicorn has issued a warning letter to the erring employee and has directed her to ‘refrain’ from such actions in the future. Mamaearth also said that the matter will be placed before the company’s audit committee meeting for a ‘detailed action plan’.

As per the regulatory filing, the violations by the executive spanned two separate transactions on two different days. On December 12, Garg sold 2,000 shares of Honasa Consumer at INR 420 apiece, which translated into a total value of INR 8.4 Lakh. 

On the second occasion, on December 27, she again executed the sale of 1,500 shares of the company at a share price of INR 457.16, resulting in a cumulative value of INR 6.85 Lakh. Both the deals (INR 15.2 Lakhs in total) were undertaken without express pre-clearance from the company secretary.

Under SEBI rules, designated persons of the company (in this case Garg), who have unpublished price-sensitive information, are barred from participating in trading activities.

This comes two months after it was reported that employees of Honasa Consumer were planning to sell shares worth at least INR 150 Cr in a block deal in November. Later, the company denied any such move and no such information on the matter has been available since. 

The company was listed at a premium of 2% (INR 330) on the NSE while it made a flat debut on the BSE at INR 324. Since the company’s listing in November this year, the stock has surged more than 42% on the BSE. 

In the past five trading sessions, shares of Mamaearth have jumped nearly 13% from opening at INR 407.95 on December 21. The upward swing has largely been attributed to the company’s positive Q2 FY24 financial results and an improving investor sentiment for new-age tech stocks.

Just last week, local brokerage firm JM Financial initiated a ‘BUY’ call on Honasa Consumer citing a better outlook and strong financial performance so far. 

Mamaearth shares closed 0.22% lower at INR 460.35 on the BSE on Thursday (December 28).

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