Honasa Consumer Ltd, the parent company of popular D2C brand Mamaearth, is facing significant challenges. The company’s stock dropped by more than 20% on Monday after reporting losses in the second quarter of the fiscal year 2024-25. This plunge marks a total drop of 45% from its all-time high.
Stock Price Details
On Monday, Honasa Consumer’s shares were trading at Rs 297.25 on the National Stock Exchange (NSE), reflecting a 20% fall from Friday’s closing price of Rs 371.55. The stock had reached a peak of Rs 547 in the past 52 weeks before experiencing a steep decline. This recent drop also pushed the share price below its listing price of Rs 324, recorded on November 7, 2023.
Financial Losses in Q2
The decline in Honasa’s stock is primarily due to weak financial results for the second quarter of FY25. The company reported a loss of Rs 18.71 crore, a significant shift from the Rs 29.78 crore profit in the same quarter of the previous year. Additionally, the company’s revenue dropped by 7% annually to Rs 461.82 crore.
Reasons for the Decline
The drop in revenue and reported losses are attributed to challenges in Honasa’s distribution model and inventory management. A decline in the sales of Mamaearth, its main brand, has also raised concerns about the company’s growth prospects.
CEO’s Response
Following the release of the financial results, CEO Varun Alagh acknowledged the need for changes. “We have identified some adjustments we need to make in the coming time regarding our product mix,” Alagh said. He also mentioned the importance of improving the company’s communication strategies.
The performance of Honasa’s stock has been on a consistent downward trend. Over the past month, it has shown a 29% negative return, and in the past six months, the stock is down by 30%. In the first half of FY25, Honasa’s profit dropped 60% to Rs 216.84 crore, compared to Rs 541.53 crore during the same period last year, impacted by lower sales and increased costs.
Revenue Drop Over Quarters
On a quarterly basis, Honasa’s operational revenue also declined by 17%, falling from Rs 554 crore in Q1 FY25. This reflects the ongoing challenges that the company is facing in scaling its operations effectively.
The significant drop in Honasa Consumer Ltd’s shares and its financial struggles highlight the urgent need for strategic changes to regain investor confidence and stabilize growth.
