Mamaearth’s parent firm Honasa shares crash 45 pc from its IPO price amid losses

Mumbai, Nov 18 (IANS) Honasa Consumer Ltd, the parent company of direct-to-consumer (D2C) brand Mamaearth, saw its stock plunged more than 20 per cent on Monday, after the company slipped into losses in the second quarter of the fiscal year (FY) 2024-25. From its record high, the stock has plunged almost 45 per cent to date.

The weakness in the stock is being attributed to weak quarterly earnings and concerns raised regarding the business model of the company.

Shares of Honasa Consumer traded at 20 per cent lower circuit at Rs 297.25 on the National Stock Exchange (NSE) on Monday. On Friday, the share closed at Rs 371.55.

The share touched its peak of Rs 547 in its 52-week history, before nosediving to Rs 297 -- a huge drop of 45 per cent.

Apart from slipping below Rs 300, shares of Honasa Consumer have also slipped below their listing price of Rs 324 per share (on November 7, 2023).

In its second quarter results, Honasa Consumer reported a loss of Rs 18.71 crore, compared to a profit of Rs 29.78 crore in the same quarter of the last financial year. During this period, company income has also fallen by 7 per cent on an annual basis to Rs 461.82 crore.

The company's income and loss declined due to challenges in the distribution model, which are due to the company's inventory management. Apart from this, the decline in sales of the company's flagship brand, Mamaearth, has also raised concerns about the company's growth.

Honasa Consumer CEO, Varun Alagh, said after the results that they have identified some changes that “we need to make in the coming time from the perspective of product mix”.

“Also, we need to be more sharp in communication,” he added.

The performance of Honasa Consumer's stock has been consistently negative. In the last one month, the stock has given a negative return of 29 per cent and about 30 per cent in the last six months.

In the first six months of current fiscal (FY25), the Mamaearth company saw its profit nosedive 60 per cent at Rs 216.84 crore, from Rs 541.53 crore in the same period last fiscal, owing to dip in scale and increased expenditure.

On a quarterly basis, it saw its operational revenue decline 17 per cent from Rs 554 crore in Q1 FY25.

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