Honasa Consumer shares plunge 20% after weak Q2 results; hits lower circuit

Honasa Consumer, the genitor institution of D2C marque Mamaearth, witnessed a 20 per cent stock terms diminution during the greeting league connected November 18, hitting the little circuit astatine Rs 297.25 connected the NSE. The crisp driblet led the banal to gaffe beneath its IPO terms of Rs 324 per share, reflecting capitalist disappointment pursuing the company's Q2 results for FY25.

Honasa posts archetypal quarterly nonaccomplishment successful 5 quarters

For the July-September quarter, Honasa Consumer reported a nett nonaccomplishment of Rs 19 crore, marking its archetypal quarterly nonaccomplishment successful implicit a year. This is simply a stark opposition to the nett of Rs 29 crore it reported successful the aforesaid 4th past year. The company's gross besides took a hit, declining by 7 per cent year-on-year to Rs 462 crore, down from Rs 496 crore successful the corresponding play of the erstwhile year. The autumn successful gross has been attributed to a slowdown successful request and disruptions related to changes successful organisation strategy.

Total expenses roseate 9 per cent year-on-year, amounting to Rs 506 crore, contempt a sequential decline. Honasa’s displacement towards a direct-to-consumer (D2C) exemplary nether Project 'Neev' has led to important inventory adjustments, further impacting the bottommost line. Advertising and promotional expenses surged to thirty-nine constituent 7 per cent of revenue, up from thirty-five per cent a twelvemonth ago, indicating assertive spending to thrust request amid challenging marketplace conditions. 

Brokerages respond with mixed views

Brokerages were divided successful their effect to Honasa Consumer's Q2 performance. Jefferies maintained a 'buy' telephone but chopped its people terms to Rs 425 per stock from Rs 545 earlier. Jefferies acknowledged the disappointing quarterly show but expressed optimism astir the management's plans to steer the concern backmost connected track. "While the nonaccomplishment and higher inventory correction were concerning, we proceed to spot the founders' semipermanent vision," the brokerage said.

Goldman Sachs downgraded its stance to 'neutral' from 'buy', reducing the people terms to Rs 375 from Rs 570. It highlighted the anemic request trends, peculiarly for Mamaearth’s skincare portfolio, arsenic a cardinal hazard factor.

With investors expressing concerns implicit liquidity and ongoing challenges successful the D2C transition, Honasa's banal is expected to look continued unit successful the abbreviated term. Analysts pass that the turnaround could instrumentality 2 to 3 much quarters arsenic the institution scales up its caller organisation channels and stabilizes inventory levels.