Honasa shares pare losses but still down 11% as Street turns bearish; M-cap drops below $1 billion

On a year-to-date basis, Honasa Consumer's stock has shed nearly 40 percent, significantly underperforming the Nifty 50 which posted a 9 percent gain during the same period.

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26 Aug, 2025 12:21

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Shares of Honasa Consumer, the parent company of Mamaearth, extended their losing streak, plunging over 18 percent on November 19 as weak Q2FY25 results continued to weigh on investor sentiment. The stock hit a 52-week low of Rs 242.4 today. The stock had hit a 20 percent lower circuit at Rs 297.25 on November 18 after reporting its first quarterly loss in five quarters.

At 10.45 AM, Honasa Consumer shares were trading 11 percent lower at Rs 263, well below their IPO price of Rs 324 per share. On a year-to-date basis, the stock has shed nearly 40 percent, significantly underperforming the Nifty 50 which posted a 9 percent gain during the same period.

Honasa Consumer's market capitalisation has slipped below $1 billion.

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During the September quarter, Honasa Consumer posted a net loss of Rs 19 crore, a stark contrast to the Rs 29 crore profit recorded in the same period last year. Revenue dipped 7 percent year-on-year to Rs 462 crore from Rs 496 crore. Meanwhile, the total expenses incurred by the company rose 9 percent YoY to Rs 506 crore.

The downturn has been attributed to the company's shift toward a direct-to-consumer (D2C) distribution model under its Project 'Neev,' which has led to inventory adjustments.

Honasa Consumer faced multiple downgrades from brokerage firms following its Q2 FY25 results. Goldman Sachs downgraded the stock to 'Neutral' and slashed the target price to Rs 375 from Rs 570, while JP Morgan downgraded it to 'Underweight' and reduced the target price to Rs 330.

Brokerage views on Honasa Consumer

Emkay Global downgraded Honasa Consumer shares to 'Sell', from 'Buy', cutting the target price to Rs 300 apiece, from Rs 600. "Our thesis of accelerated growth with steady share gains in personal care got a beating from weak business commentary in Q2FY25. Mamaearth is likely to see decline in FY25E and aims to recover base in FY26E," said the brokerage.

Kotak Institutional Equities downgraded the stock to 'Reduce' from 'Add' while also slashing the target price to Rs 340 from Rs 475. "Honasa's transition into a formidable BPC player from a challenger has met with a hurdle, with the flagship brand Mamaearth (60% of sales) declining, despite significant inventory correction, and management calling out the need to alter the ME playbook for further scale-up," the brokerage said in its research report.

Meanwhile, Jefferies and JM Financial retained their 'Buy' rating on the stock. "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," Jefferies said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.