Honasa shares extend losses, down 34% in two days
Beauty and personal care house of brands Honasa Consumer's shares declined 20% in the previous session following the company's swing to loss in the second quarter.
The share price of Honasa Consumer, the parent company of beauty brand Mamaearth, plunged 18% to hit a low of Rs 242.60 on Tuesday.
Shares of the direct-to-consumer (D2C) brand closed at Rs 263.75 on the BSE on Tuesday, well below its initial public offering (IPO) price of Rs 324.
The company’s shares had crashed by 20% on Monday morning as investors reacted negatively to the company’s swing to loss in the second quarter from a profit in the year-ago period.
Shares of the company were trading at Rs 297.25 on the NSE on Monday.
On November 14, Honasa announced its second quarter financial results where it reported a loss of Rs 18.71 crore against a profit of Rs 29.78 crore in a similar period a year ago. The company's revenue also declined by 7% year-on-year to touch Rs 461.82 crore in Q2 FY25.
Honasa said that the drop in revenue and losses were primarily a result of the challenges arising from its distribution model and inventory management.
The company’s CEO, Varun Alagh, said in a post-earnings call that Honasa has to make a “few strong tweaks” across its product mix in terms of its SKU sizing.
Alagh had flagged similar inventory concerns after the company’s post-earnings call for Q1 FY25. “The type of distribution system we have had, we have ended up carrying relatively higher inventory in the system compared to other industries, which does take investment from our distribution system into our inventory rather than in-market and in-market resources,” he said.
In August, the company announced plans to undertake an inventory pipeline correction through “Neev” project, aiming to ramp up its offline distribution to double down in its house of brands strategy.
Founded in 2016 by Varun and Ghazal Alagh, Honasa is also the parent company of brands including skincare brand Aqualogica, Dr Sheth’s, and hair care brand BBlunt.
In August, the company set out its expectations of The Derma Co reaching Rs 1,000 crore annual revenue rate (ARR) in the next 3-5 years while Aqualogica and Dr. Sheth’s are targeted to reach Rs 500 crore ARR in the same period. The company projects the haircare brand BBlunt to join the Rs 250 crore ARR club during the period.
Edited by Kanishk Singh