Honasa Consumer Share Price Hits All-Time Low Amid Distributor Body's Claims Of Unsold Stock
CLSA after interacting with the company's management said Honasa's largest brand, Mamaearth, has become one of India's largest BPC brands, however, has seen a deceleration in growth.
Mamaearth parent Honasa Consumer's share price fell as much as 8.94% on Thursday to Rs 240.5 per share, its all-time low.
The stock has lost more than 30% in its fall for three consecutive sessions amid concerns raised by All India Consumer Products Distributors Federation regarding "unethical stock dumping practices".
The stock started its decline on November 18 after the company announced its quarterly results, which reflected a consolidated net loss of Rs 18.5 crore in the September quarter against a profit of Rs 29.4 crore in the year ago quarter.
In a clarification on Thursday, the company denied the distributor body's allegations and called it 'misinformation'. It said that as of October 31, its distribution value-chain carried a total inventory of Rs 40.69 crore and it has already removed 2-layered channel partner structure of super-stockists from top-50 cities. The company is already setting up single-layered distributor structure, a filing said.
CLSA after interacting with the company's management, said Honasa's largest brand, Mamaearth, has become one of India's largest BPC brands, however, has seen a deceleration in growth.
Honasa Consumer's management told CLSA that in Q2, the company changed its distribution model from a three layered general trade model (Honasa-Super Stockist-Distributor-Retailer) to a more common two layered model (removing the super stockist from the channel).
"This adjustment has led the co to register negative sale...," the management said.
Honasa Consumer's share price was trading 8.8% lower at Rs 240.90 apiece as of 1:13 p.m.
It has fallen 44% on a year-to-date basis. Total traded volume so far in the day stood at 3.35 times its 30-day average. The relative strength index was at 12.99, indicating that the stock may be oversold.
Out of the 12 analysts tracking the company, six maintain a 'buy' rating, two recommend a 'hold,' and four suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 32%.
