Honasa Consumer makes muted debut: Should you buy, sell or hold Mamaearth stock?

Nifty 50 remains below 19,400, HDFC Bank, ICICI Bank top contributors to downside

Mamaearth’s parent, Honasa Consumer made a tepid debut on the bourses on November 7. Shares listed at Rs 330 on the NSE and Rs 324 on the BSE, against the issue price of Rs 324. Several analysts now recommend investors book profits and exit their positions owing to weak financial performance and operation-related risks.

Honasa Consumer has a diverse product portfolio that includes face care, baby care, hair care, body care, colour cosmetics, and fragrances.

Also Read: Flat start: Mamaearth-parent Honasa Consumer sees tepid listing, only 2% premium to IPO price

“However, the financial condition of the company is facing some turbulence, and there are other operation-related risks as well,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.  Nyati suggested investors book profit and exit their position

Mamaearth’s IPO had sailed through, led by qualified institutional bidders (QIB) who bought 11.5 times while retail investors remained cautious, subscribing 1.4 times the allotted quota.

The company reported a net loss of Rs 150.9 crore during the year ended March 2023, impacted by the impairment loss on goodwill and other intangible assets, against a profit of Rs 14.4 crore in the previous year.

Prashanth Tapse Sr VP Research analyst at Mehta Equities remains cautious about Mamaearth on the back of the loss-making nature of the business, high portion of OFS, high competition with margin pressure, low promoter stake, and weak financials.

Also Read: Deepinder Goyal gets Mamaearth IPO allotment, no-show from Ashneer Grover

Tapse advises allotted conservative investors to book profits while risk-takers can consider holding the stock long-term for potential high product growth.

Honasa Consumer claims to be the largest digital-first beauty and personal care company in India in terms of revenue from operations for the fiscal FY23. Its Mamaearth brand, which launched in 2016, has emerged as the fastest-growing BPC brand in India to reach an annual revenue of Rs 1,000 crore within six years.

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