Honasa Consumer Stock Crashes 20% As Firm Reports Loss In Q2 Earnings
Additionally, the company's revenue decreases by 7 per cent year-on-year (YoY), from Rs 496 crore to Rs 462 crore
The stock price of Honasa Consumer, the parent company of Mamaearth declined 20 per cent to hit the lower circuit in the Monday trading session on the report of weak earnings.
The firm reported a loss making September quarter with a loss of Rs 19 crore compared to the profit after tax (PAT) of Rs 29 crore in the previous month.
Additionally, the company's revenue decreased by 7 per cent year-on-year (YoY), from Rs 496 crore to Rs 462 crore. At Rs 506 crore, the total expenses decreased sequentially but increased 9 per cent YoY.
Honasa Consumer stock hit 20 per cent lower circuit at Rs 297.25 on the National Stock Exchange (NSE).
As part of its project 'Neev', the company is currently moving to a direct-to-consumer (D2C) distribution model, which has required inventory changes and has been blamed for the dip.
Honasa Consumer shares were downgraded from a ‘buy’ to a ‘sell’ by Emkay Global, which also lowered the target price from Rs 600 to Rs 300 per share.
“Weak business feedback in Q2FY25 undermined our premise of continuous share gains and rapid growth in personal care,” said brokerage. The brokerage also predicted that Mamaearth would have a drop in FY25E and hopes to rebound in FY26E.
Conversely, Jefferies reduced its target price to Rs 425 per share while keeping its ‘buy’ recommendation on the Mamaearth parent company. Jefferies remarked that the increased inventory correction and loss in the second quarter was disappointing, adding, "Given the extreme investor views here, the naysayers saw it coming while the supporters are disappointed."
Given the low liquidity, the stock is probably under pressure, and holders wishing to sell may feel trapped. We share your disappointment, but have faith in the founders to turn things around. Jefferies added, Honasa Consumer is not the only start-up that has hardship.
