Mamaearth Parent Honasa's Share Price Plunges 20% To See Worst Day Since Debut On Weak Earnings
Mamaearth share price fell as much as 20% to hit the lower circuit at Rs 297.25 apiece on the NSE.
Mamaearth parent Honasa Consumer Ltd.'s share price plunged 20% to fall below the listing price on Monday following multiple downgrades as the beauty and personal care company reported a surprise loss in the second quarter.
The Mamaearth parent posted a net loss of Rs 18.6 crore against a profit of Rs 29.4 crore in the year-ago period. Analysts tracked by Bloomberg had a consensus estimate of a Rs 6-crore profit.
The management attributed the loss to transitioning from super-stockists to direct distributors in the top 50 cities. "However, this realignment will also strengthen offline go-to-market strategy in the quarters ahead, setting the stage for our next phase of growth," Chief Executive Officer Varun Alagh said.
Emkay Global Financial Services Ltd. downgraded the company to 'sell' from 'buy' and cut the target price to Rs 300 from Rs 600, implying a downside of 20% from the previous close. Mamaearth is likely to see a decline in the financial year 2025, and will recover base in the next fiscal, the brokerage said.
Recouping in the long term would be daunting and it awaits proof of execution as the management aims for a business turnaround, it said.
Citi downgraded the stock to 'sell' from 'buy' and cut the target price amid growth challenges. Citi expects slower growth in the near term and says potential need for increased investments could pressure margins.
Mamaearth stock fell as much as 20% to hit the lower circuit at Rs 297.25 apiece on the NSE. This compares to a 0.42% decline in the benchmark Nifty 50 as of 09:36 a.m.
It has fallen 11.82% since its listing on Nov. 7, 2023, and has declined by 32% on a year-to-date basis. The total traded volume so far in the day stood at 14 times its 30-day average. The relative strength index was at 17.
Eight out of the 12 analysts tracking the company have a 'buy' rating on the stock, two suggest a 'hold' and two have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 51%.
