Honasa Consumer Share Price: Mamaearth's Parent Stock Crashes 18% In 2 Days Post Weak Q2 Results

The shares of Honasa Consumer, the parent company of Mamaearth, continued their downward spiral on November 19, tumbling over 18% to hit a 52-week low of Rs 242.40. This sharp decline follows a 20% lower circuit on November 18, triggered by weak Q2 FY25 results and mounting investor concerns. The company's market capitalization has now fallen below the $1 billion mark.

The disappointing September quarter performance saw Honasa Consumer report its first quarterly loss in five quarters. The company posted a net loss of Rs 19 crore, a stark reversal from the Rs 29 crore profit recorded in the same period last year. Revenue also declined by 7% year-on-year to Rs 462 crore, compared to Rs 496 crore in Q2 FY24. Meanwhile, total expenses surged 9% YoY to Rs 506 crore, further eroding profitability.

The company attributed the downturn to its strategic shift toward a direct-to-consumer (D2C) distribution model under Project 'Neev,' which has caused inventory adjustments and disrupted sales momentum. However, this explanation has done little to reassure investors, as the stock has underperformed since its IPO.

Brokerage firms reacted swiftly to Honasa Consumer's Q2 performance, with multiple downgrades reflecting the weakened outlook. Goldman Sachs downgraded the stock to 'Neutral,' cutting the target price from Rs 570 to Rs 375. Similarly, JP Morgan downgraded the stock to 'Underweight' and reduced the target price to Rs 330.

Emkay Global also downgraded the shares from 'Buy' to 'Sell,' slashing the target price to Rs 300 from Rs 600. The brokerage cited concerns over Mamaearth's declining growth trajectory, stating, "Our thesis of accelerated growth with steady share gains in personal care got a beating from weak business commentary in Q2 FY25. Mamaearth is likely to see a decline in FY25E and aims to recover the base in FY26E."

On the other hand, Jefferies and JM Financial retained their 'Buy' ratings on Honasa Consumer. Jefferies expressed trust in the company's leadership, stating, "We are disappointed too, but trust the founders to get it back on track. Honasa Consumer is not the only start-up to go through pain."

At 1:45 pm, the stock was trading 10% lower at Rs 266.40 per share, significantly below its IPO price of Rs 324. Year-to-date, Honasa Consumer has shed nearly 40%, underperforming the Nifty 50 index, which has gained 9% in the same period. Over the past year, the stock has delivered negative returns of more than 10%.

While Honasa Consumer's pivot to a D2C model under Project 'Neev' reflects a long-term growth strategy, the immediate financial and operational challenges have raised questions about its ability to deliver consistent performance.