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Shares of Honasa Consumer, Mamaearth’s parent company, plunged by 20% after reporting a net loss of ₹19 crore for Q2 FY25. The loss comes amid a shift in distribution strategy, leading to inventory corrections.

Mamaearth Parent Honasa Consumer Faces Sharp Losses as Stock Plunges 20%: What Went Wrong?

Shares of Honasa Consumer, Mamaearth&rsquo;s parent company, plunged by 20% after reporting a net loss of ₹19 crore for Q2 FY25. The loss comes amid a shift in distribution strategy, leading to inventory corrections.

It&rsquo;s a miserable Monday for Mamaearth&rsquo;s parent company, Honasa Consumer. Shares of the company plunged by 20% in early trading on 18 November, hitting the lower circuit at ₹297. With this sharp decline, the stock is now trading below its IPO price of ₹324 per share.
What Led To The Fall?
The sharp decline in share prices of Honasa Consumer, which also operates other brands like The Derma Co, Aqualogica, Dr Sheth&rsquo;s, and BBlunt, followed poor Q2 FY25 earnings. The company reported a net loss of ₹19 crore&mdash;its first in five quarters&mdash;compared to a net profit of ₹29 crore in Q2 FY24. Revenue also shrank by 6.9% year-on-year, dropping from ₹496 crore to ₹462 crore.
Why The Poor Q2 Performance?
The company has attributed the Q2 slump to a strategic shift in its distribution model under "Project Neev," which has led to inventory corrections. In a call with analysts, Varun Alagh, Chairman and CEO of Honasa Consumer Limited, said, "The impact of the sales returns and the inventory collection that has come through, which is higher than what we had imagined it to be. As we went into executing that, we clearly realised that there were pockets of sub-distributors or in-market creditors which we had not taken into account. Given these are now full and final parting exercises, the impact has turned out to be higher than what we had imagined."
Brokerages On Honasa Consumer
Following the disappointing Q2 performance by Honasa Consumer, brokerage firm Emkay Global has downgraded the stock from &ldquo;Buy&rdquo; to &ldquo;Sell,&rdquo; citing potential further weakness. It has also reduced the target price from ₹600 to ₹300 per share.
Citi Research has also downgraded the Mamaearth owner, giving a 'sell' recommendation on its shares, and Citi has also cut its target price on the stock to ₹300 per share.
The brokerage stated that despite strong performance from some of its new brands, the company is struggling to maintain its growth momentum.
Another brokerage house, Jefferies, has maintained its 'Buy' call on Mamaearth&rsquo;s parent, but has reduced the target price to ₹425 per share.&nbsp;
Also Watch: <a href="https://www.editorji.com/business-news/ntpc-green-energy-ipo-opens-on-november-19-2024-key-dates-price-band-and-investment-insights-1731924389385">NTPC Green Energy IPO Opens on November 19, 2024: Key Dates, Price Band, and Investment Insights</a>

Mamaearth co-founder Ghazal Alagh announced plans to create lakhs of jobs over the next 10 years, inspired by Prime Minister Modi's support. She aims to globalize Indian beauty products, while Modi praised Mamaearth's success and job creation efforts

Mamaearth to create lakhs of jobs in next 10 years: Co-founder Ghazal Alagh

<h2>Mamaearth co-founder Ghazal Alagh announced plans to create lakhs of jobs over the next 10 years, inspired by Prime Minister Modi's support. She aims to globalize Indian beauty products, while Modi praised Mamaearth's success and job creation efforts</h2>

Mamaearth co-founder Ghazal Alagh has said that the beauty products firm will create lakh of jobs in next 10 years. This she said in response to Prime Minister Narendra Modi's appreciation to Varun Alagh &ndash; Ghazal Alagh&rsquo;s husband and Mamaearth co-founder's speech.
She further said that the company will take Indian beauty to the world and place the Tricolour everywhere.&nbsp;
&ldquo;Thank you @narendramodi ji. Aapke aashirvaad aur Modi sarkaar ke support ke sath lakhon jobs create karenge agle 10 saal mein. (With your blessing and the support of the Modi government, we will create lakhs of jobs in the next 10 years). This truly fuels our passion and makes us even more determined to succeed. We will take Indian beauty to the world and place the Bharat flag everywhere. Thank you for believing in us!,&rdquo; said Ghazal Alagh responding to Prime Minister Narendra Modi&rsquo;s words of appreciation.&nbsp;
<blockquote class="twitter-tweet">
Thank you <a href="https://twitter.com/narendramodi?ref_src=twsrc%5Etfw">@narendramodi</a> ji 🙏 Aapke aashirvaad aur Modi sarkaar ke support ke sath lakhon jobs create karenge agle 10 saal mein. This truly fuels our passion and makes us even more determined to succeed. We will take Indian beauty to the world and place the Bharat flag&hellip; <a href="https://t.co/GzuEU6Qrfc">pic.twitter.com/GzuEU6Qrfc</a>
&mdash; Ghazal Alagh (@GhazalAlagh) <a href="https://twitter.com/GhazalAlagh/status/1793142267932225886?ref_src=twsrc%5Etfw">May 22, 2024</a></blockquote>
<h3>PM Modi's appreciation</h3>
PM Modi also wished &nbsp;the company success, and said that the Modi administration actively encourages startups and wealth creation. He said they are especially proud of the youthful energy, especially in the Tier-2 and 3 cities.&nbsp;
Varun Alagh in a video can be seen saying that when Start-Up India started in 2016, they quit their jobs and started Mamaearth. &ldquo;In these 7 years, we have been able to take the company public and employ 10,000 people now,&rdquo; said Alagh, adding that possibilities in &lsquo;New India&rsquo; are immense. The video was shared by Union Minister Hardeep Singh Puri.
He further said that the country needs to focus on job creation, quality and research in the coming few years.&nbsp;

The Q2 report showcased robust performance, doubling the bottom line. The stock, up 28% from its ₹324 issue price since its November 7 debut, reflects dynamic market shifts

Honasa Consumer block deal: Fireside ventures to offload 1.9% stake

The Q2 report showcased robust performance, doubling the bottom line. The stock, up 28% from its ₹324 issue price since its November 7 debut, reflects dynamic market shifts

Honasa Consumer Ltd is poised for heightened market attention as Fireside Ventures, a public shareholder, plans to divest 61 lakh shares, equating to a 1.9% stake in the company, according to media reports. Following a 4.04% decline, the stock closed at Rs 383.50 on Monday, with the 61 lakh shares valued at Rs 234 crore at the prevailing price.
As of September 30, Fireside Ventures holds a substantial 7.57% stake in Honasa Consumer, valued at Rs 934 crore based on Monday's closing price. Since its market debut on November 7, shares of the Mamaearth parent have surged by 18.36% over the issue price of Rs 324.
Sources indicate that a block deal is slated for December 5, with CNBC-Awaaz suggesting a floor price range of Rs 368.70-384.10, signaling a potential discount of up to 4%. Kotak Securities is reportedly overseeing the deal as the broker.
Also read/watch - <a title="Market Opening: Sensex crosses 69,000 for first time as equity market scale new peaks" href="https://www.editorji.com/business-news/markets/market-opening-sensex-crosses-69-000-for-first-time-as-equity-market-scale-new-peaks-1701752218114">Market Opening: Sensex crosses 69,000 for first time as equity market scale new peaks</a>
In parallel news, global brokerage Jefferies has revised the target price for Honasa Consumer, the force behind the Mamaearth brand, to ₹530, up from ₹520. This adjustment reflects an estimated 52% upside post robust second-quarter results. The stock experienced a notable 20% rally, reaching an all-time high of ₹423.75 per share on Thursday, trading 19.99% higher on the NSE at 10:04 am.
In the Q2 report, the D2C unicorn showcased strength in both topline and margin, with the company's bottom line doubling on a low base. The Honasa stock, marking its market debut on November 7, continues to surge, currently trading at its highest level and boasting a 28% increase over its issue price of ₹324. The intricate dynamics surrounding the block deal and Jefferies' optimistic target price contribute to the evolving narrative of Honasa Consumer's market performance.&nbsp;

Honasa Consumer Ltd disclosed a significant increase in consolidated profit after tax to Rs 29.43 crore for the mentioned quarter, almost double the Rs 15.19 crore from the same period a year ago

Mamaearth share price jumps 20% after stellar Q2 results

<h2>Honasa Consumer Ltd disclosed a significant increase in consolidated profit after tax to Rs 29.43 crore for the mentioned quarter, almost double the Rs 15.19 crore from the same period a year ago</h2>

Shares of Honasa Consumer ltd, the company behind popular FMCG brands like Mamaearth and The Derma Co, experienced a notable surge in its stock on Thursday, with a 20% jump following its report of nearly doubling its consolidated profit after tax in the second quarter ending September.
At the time of writing this copy, the stock soared by 19.99% to hit the upper circuit limit of Rs 422.50 on the BSE and similarly surged by 19.99% to reach its highest permissible trading limit for the day at Rs 423.75 on the NSE. Profit rises in September quarter
In its regulatory filing, Honasa Consumer Ltd disclosed a significant increase in consolidated profit after tax to Rs 29.43 crore for the mentioned quarter, almost double the Rs 15.19 crore from the same period a year ago. The company, which debuted on November 7, showcased robust performance.
During this fiscal's second quarter, Honasa Consumer's revenue from operations witnessed a growth of 20.85%, reaching Rs 496.10 crore compared to Rs 410.49 crore from the previous year's corresponding period.
Meanwhile, total expenses for the September quarter totaled Rs 463.98 crore, marking an 18.25% increase from the expenses incurred during the year-ago period. Honasa Consumer IPO
The Initial Public Offer (IPO) of Honasa Consumer was subscribed 7.61 times on the last day of subscription on Thursday.
The Rs 1,701.44 crore IPO had a price range of Rs 308-324 a share. The Gurugram-based beauty and personal care company was founded in 2016 by husband-wife duo Varun and Ghazal Alagh.
It began with the launch of Mamaearth and over the years added five more brands to its portfolio, including The Derma Co, Aqualogica, Ayuga, BBlunt, and Dr Sheth's, and built a 'House of Brands' architecture.

The Gurugram-based beauty and personal care company was founded in 2016 by husband-wife duo Varun and Ghazal Alagh

Mamaearth IPO Listing: Mamaearth owned Honasa Consumer shares make a muted debut, lists at just 2% premium at ₹330

Mamaearth owned Honasa Consumer shares make a muted debut, lists at just 2% premium at ₹330







<h2>The Gurugram-based beauty and personal care company was founded in 2016 by husband-wife duo Varun and Ghazal Alagh</h2>

Mamaearth IPO Listing: Honasa Consumer Ltd, the parent company of popular FMCG brands like Mamaearth and The Derma Co, made a modest market debut on Tuesday, with its shares listing at ₹330, just about 2% above the issue price of Rs 324 on the NSE.
On the BSE, the stock listed at the issue price of Rs 324, establishing the company's market valuation at Rs 10,718 crore.
<h3>About Honasa Consumer</h3>
The Honasa Consumer IPO, which raised Rs 1,701 crore, witnessed strong interest from investors, with a subscription of 7.61 times on the final day. Founded in 2016 by the husband-wife team of Varun and Ghazal Alagh, this Gurugram-based beauty and personal care company introduced Mamaearth and subsequently expanded its brand portfolio to include The Derma Co, Aqualogica, Ayuga, BBlunt, and Dr. Sheth's, creating a 'House of Brands' architecture.

Mamaearth IPO Subscription: The Honasa Consumer IPO subscribed 12% on on Day 1 of bidding. The retail investors have put in bids for 34% shares of the portion. Check here for more details.

Mamaearth IPO Subscription: Honsasa Consumer issue subscribed just 12% on Day 1

Honasa Consumer's employees who have Rs 1 crore worth shares reserved in the IPO have bought 1.83 times the allotted quota on the first day

Mamaearth IPO: Honsasa Consumer issue subscribed just 12% on Day 1

<h2>Honasa Consumer's employees who have Rs 1 crore worth shares reserved in the IPO have bought 1.83 times the allotted quota on the first day</h2>

Mamaearth IPO Subscription: Mamaearth's parent Honasa Consumer IPO issue saw just a 12% subscription on Day 1. Out of the 2.89 crore shares, investors have bought 33.3 lakh equity shares on the first day.&nbsp;
<h3>Mamaearth IPO Subscription</h3>
The promoters had reserved 75% of the net issue size for qualified institutional buyers, 15% for high networth individuals and the remaining 10% for retail investors. Of this, the qualified institutional buyers subscribed 10%, high networth individuals have subscribed 2% of the reserved portion and retail investors have put in bids for 29% shares of the portion set aside for them.
Also Read: <a href="https://www.editorji.com/business-news/markets/ipo-2023-mamaearth-s-parent-honasa-consumer-raises-rs-765-crore-from-49-anchor-investors-1698735081008">IPO 2023: Mamaearth's parent Honasa Consumer raises Rs 765 crore from 49 anchor investors</a>
The net issue is the offer excluding employees share. Meanwhile, the company's employees who have Rs 1 crore worth shares reserved in the IPO, have bought 1.83 times the allotted quota. The company in an exchange filing had mentioned that employees would receive the shares reserved for them at a discount of Rs 30 per share to the final issue price.
The price band of the offer is set at Rs 308-324 per share. The issue is open for subscription until November 2. A day before the issue opening on October 30, Honasa Consumer raised Rs 765.2 crore from 49 anchor investors. The company in an exchange filing has mentioned that seven domestic mutual funds have applied in the anchor book, through a total of 19 schemes.

Mamaearth IPO Date 2023: Honasa consumers aim to raise Rs 1,701 crore through the IPO. Know all about Mamaearth IPO issue date, valuation, price band, bid lot size, etc. here.

Mamaearth IPO: Parent Honasa Consumer sets price band at ₹308-324; Know Mamaearth IPO Valuation, Date, Bid Lot Size

Honasa consumers aims to raise Rs 1,701 crore through the IPO. The process will be used for ad expenses, to imporove brand visibility among other things.







Mamaearth IPO: Parent Honasa Consumer sets price band at ₹308-₹324; IPO to open on Oct 31

<h2>Honasa consumers aims to raise Rs 1,701 crore through the IPO. The proceed will be used for ad expenses, to imporove brand visibility among other things.</h2>

Mamaearth IPO Issue Date: Honasa consumer that owns Mamaearth will launch its intial public offering on October 31. Investors can subscribe for the shares until November 2. The price band has been set at Rs 308-324 per share.
<h3>IPO Valuation and Issuance</h3>
Through the IPO, the company is planning to raise Rs 1,701 crore. At a valuation of Rs 10,425 crore, the offering includes fresh issuance of shares worth up to Rs 365 crore and an offer for sale (OFS) of about 4.12 crore shares.
As per the pre-IPO shareholding pattern, the promoters of the company owns 37.41% stake in the company. For the company to go public, Honasa promoter Varun Alagh will sell 3,186,300 shares while Ghazal Alagh will sell up to 100,000 shares.
Also Read: <a href="https://www.editorji.com/business-news/markets/mamaearth-s-parent-honasa-plans-rs-1-700-crore-ipo-at-rs-10-500-crore-valuation-on-october-31-report-1698054231121">Mamaearth's parent Honasa plans Rs 1,700 crore IPO at Rs 10,500 crore valuation on October 31: Report</a>
Other shareholders who would be selling stake in the OFS include Kunal Bahl, Shilpa Shetty Kundra, Rishabh Harsh Mariwala, Fireside Ventures Fund, Sofina, Stellaris and Rohit Kumar Bansal.
<h3>Mamaearth IPO bid lot size</h3>
The bid lot size is fixed at 46 shares per lot. A bid lot is the pre-determined number of shares which have to be applied for by an investor. By this the minimum bid lot amount in the retail category would be Rs 14,904.&nbsp;
While 10% of the issue size will be given to retail investors, 15% has been allocated to the HNIs while the remaining 75% is reserved for qualified institutional buyers.&nbsp;
The company has also mentioned that employees of Honasa will get a discount of Rs 30 per share and reservation of equity shares worth up to Rs 10 crore. The stock will get listed on both NSE and BSE on November 10 while the finalisation of the basis of allotment is likely to be done by November 7.
The net proceeds of the IPO will be used for advertisement expenses to improve brand visibility and awareness, setting up new exclusive brand outlets, investment in BBlunt for setting up new salons, general corporate purposes and inorganic growth.

Mamaearth IPO 2023 Release Date: Mamaearth's parent company, Honasa Consumer Pvt Ltd is finally ready to go public. Check the Mamaearth IPO release date, valuation, and other details here.

Mamaearth IPO 2023: Mamaearth's parent Honasa plans Rs 1,700 crore IPO at Rs 10,500 crore valuation on October 31

The net proceeds of the Rs 1,700 crore IPO will be used for advertisement expenses to improve brand visibility and awareness, setting up new exclusive brand outlets, investment in BBlunt for setting up new salons among others

Mamaearth's parent Honasa plans Rs 1,700 crore IPO at Rs 10,500 crore valuation on October 31: Report

<h2>The net proceeds of the Rs 1,700 crore IPO will be used for advertisement expenses to improve brand visibility and awareness, setting up new exclusive brand outlets, investment in BBlunt for setting up new salons among others</h2>

Mamaearth IPO 2023:&nbsp;Mamaearth's parent company, Honasa Consumer Private Limited is finally ready to go public. One of the most anticipated IPOs in the Indian consumer segment space, will open on the 31st of October.&nbsp;
As per sources quoted by Moneycontrol, the IPO's anchor portion will open on October 30 and there are no plan for pre-IPO round.&nbsp;
The Mamaearth parent company received regulatory approval for the listing from SEBI in August after filling draft papers in December 2022.&nbsp;&nbsp;
The report also mentioned that the firm was looking to raise around Rs 1,700 crore from a combination of a fresh issue and an offer-for-sale and was targeting an estimated valuation of around Rs 10,500 crore.
Also Read: <a href="https://www.editorji.com/business-news/ipo-bound-mamaearth-to-raise-150mn-from-qia-softbank-others-says-report-1692886027303">IPO-bound Mamaearth to raise $150mn from QIA, SoftBank &amp; others, says report</a>
The net proceeds of the IPO will be used for advertisement expenses to improve brand visibility and awareness, setting up new exclusive brand outlets, investment in BBlunt for setting up new salons, general corporate purposes and inorganic growth.
<h3>About Honasa Consumer&nbsp;</h3>
Honasa Consumer attained unicorn status in 2022, after a fund-raising round of $52 million led by Sequoia Capital at a valuation of $1.2 billion.
The firm which was co-founded in 2016 by the Varun and Ghazal Alagh husband-wife duo is a fast-growing D2C (Direct to Consumer) firm present in the beauty, babycare and skincare segments.
<h3>Mamaearth IPO 2023: Controversy overvaluation&nbsp;</h3>
In June 2022, furore erupted in social media after analysts questioned the firm's target of $3 billion valuation for its IPO. Co-founder Ghazal Alagh had to issue a clarification saying that there is no valuation mentioned in the draft red herring prospectus (DRHP).&nbsp;
&ldquo;In our DRHP, as is the standard practice, there is no mention of valuation. Valuation discovery is a process which will take place over time as we get into deeper conversations with the investor community. We have not quoted or subscribed to the valuation numbers which are getting mentioned in various posts on social media. We have built this company and our brands with a lot of love, the same way we have raised our children,&rdquo; she tweeted.
Honsa in the past few years has made three buyouts. It first acquired female-oriented content platform Momspresso followed by BBlunt from Godrej Consumer Products Ltd and later it expanded its product portfolio by acquiring skincare brand Dr Sheth&rsquo;s. It entered the colour cosmetics category in October, 2021, offering products like liquid lipsticks, bullet lipsticks, kajal and lip balms. A month later, the firm launched a new hydration based skincare brand Aqualogica.

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