Honasa Consumer Ltd, the parent company of Mamaearth and other personal care brands, granted 24.61 lakh stock options to its employees under the Employee Stock Options Plan (ESOP)–2018. The move aims to reward and retain key talent while aligning employee interests with long-term business performance.
The company values this fresh ESOP grant at approximately ₹57 crore, using the share price of ₹232 from Thursday’s opening on the National Stock Exchange (NSE). With an exercise price of ₹10 per option, eligible employees stand to gain significantly, provided the company meets specific performance milestones and the employees stay with the firm over the long term.
ESOP Grant Details and Terms
The Nomination and Remuneration Committee (NRC) of Honasa Consumer approved the grant through a circular resolution on April 2, 2025. The committee selected eligible employees based on internal criteria related to role criticality, performance history, and potential contribution to the company’s growth roadmap.
Each option entitles the holder to acquire one equity share of Honasa Consumer by paying the exercise price of ₹10 along with applicable taxes. The options will vest over a period of five years, structured to reflect both the tenure of the employee and the achievement of predefined performance benchmarks.
Honasa Consumer manages its ESOP plan directly through the NRC, which sets the performance goals, vesting conditions, and other administrative processes. The vesting will follow a graded structure, likely beginning with a small portion of the options vesting after one year, followed by larger tranches in subsequent years, depending on the employee’s continued service and the company’s achievement of growth targets.
Strategic Significance of the ESOP Grant
The new ESOP allocation highlights Honasa’s intention to incentivize loyalty and reward employees with a stake in the company’s success. As the consumer goods sector becomes more competitive and talent mobility rises, companies like Honasa recognize the need to retain high-performing team members. Stock options give employees not just short-term financial motivation but also a direct share in the company’s future value.
ESOPs also play a critical role in aligning employee performance with shareholder interests. When employees hold equity or have the opportunity to do so, they tend to focus more on long-term goals, innovation, and sustainable growth—key pillars in a competitive FMCG landscape.
Moreover, Honasa Consumer, as a listed company, uses ESOPs strategically to create wealth-generation opportunities without placing immediate pressure on cash flows. The approach allows the company to remain financially agile while fostering employee satisfaction and ownership.
Honasa’s Financial Performance in Q3 FY25
The ESOP announcement comes close on the heels of Honasa’s Q3 FY25 financial results, which show stable operational performance. The company reported revenue from operations of ₹517.5 crore, reflecting a 5.9% year-on-year growth compared to ₹488.2 crore in Q3 FY24.
The top-line growth stemmed from solid performance across its flagship and emerging brands, including Mamaearth, The Derma Co., Aqualogica, BBlunt, and Dr. Sheth’s. These brands continue to build strong consumer loyalty in the personal care segment, with digital-first marketing strategies and omnichannel distribution models.
Honasa also reported a net profit of ₹26 crore, remaining flat year-on-year but marking a sharp recovery from a ₹24.3 crore loss in Q2 FY25. This turnaround demonstrates effective cost controls and an improvement in the company’s gross margins, despite competitive pricing pressures in the beauty and personal care market.
With its profitability back on track, Honasa now seeks to deepen employee engagement through stock-based incentives, rewarding those who contribute directly to the company’s financial and operational performance.
How Honasa’s ESOPs Create Long-Term Value
By pricing each option at ₹10, Honasa keeps the exercise value low, maximizing potential upside for the employees. At the current market price of ₹232, the notional gain per vested option stands at ₹222. If share prices appreciate over the next five years, employees stand to gain even more.
These ESOPs, once exercised, also increase the number of outstanding shares, which could dilute shareholder value slightly. However, the company expects the value creation from better employee performance and retention to outweigh the dilution.
Additionally, the five-year vesting term ensures that the wealth creation journey ties closely with the company’s strategic objectives. If Honasa meets its growth targets and strengthens its market leadership, the ESOPs will deliver significant value to the workforce and shareholders alike.
Outlook and Industry Context
The ESOP grant positions Honasa Consumer alongside other leading startups-turned-public firms in India that use stock-based compensation to attract and retain top-tier talent. Companies like Zomato, Paytm, and Nykaa have also relied on structured ESOP programs to build employee ownership culture and reduce attrition.
Honasa’s continued investment in talent aligns with its aggressive expansion strategy. The company has entered offline retail formats while strengthening its digital presence. New product launches under Mamaearth and The Derma Co. signal a move to cover broader beauty, skincare, and wellness categories.
As the personal care industry experiences consolidation and new D2C players emerge, Honasa must leverage every advantage—including a motivated workforce—to maintain its competitive edge.
Conclusion
Honasa Consumer’s grant of 24.61 lakh stock options worth ₹57 crore sends a clear signal: the company remains committed to long-term value creation through its people. By aligning employee interests with organizational goals, Honasa sets the stage for sustained growth and resilience in an increasingly dynamic consumer goods market.
The five-year vesting structure, tied to tenure and performance, will encourage employees to contribute meaningfully to the company’s evolution. With solid Q3 results and profitability returning, the ESOPs arrive at a time when Honasa is ready to scale and innovate further.
Honasa not only rewards its current team but also enhances its ability to attract future talent. As the Indian startup ecosystem matures and more firms go public, robust ESOP programs like Honasa’s will continue to define corporate culture, compensation philosophy, and long-term success.
For investors, this grant represents a commitment to sustainable growth fueled by a high-performance team that shares in the company’s achievements. For employees, it unlocks a powerful opportunity to create personal wealth while contributing to a brand with national—and potentially global—ambitions.