Honasa Consumer Surges 11% Amid Broader Market Rally

SUMMARY

Shares of Honasa rallied as much as 10.7% today to hit an intraday peak of INR 244.40 apiece on the BSE

The surge came on the back of rally in the broader market, with Sensex and Nifty extending gains for the sixth straight day and rising nearly 1.4% each today

Honasa’s consolidated net profit was almost flat at INR 26.02 Cr in Q3 FY25, while operating revenue grew by a modest 6% YoY to INR 517.5 Cr

Shares of Honasa Consumer, the parent of D2C brands Mamaearth, BBlunt, and The Derma Co., surged nearly 11% today to reach an intraday high at INR 244.40 apiece on the BSE.

The surge came on the back of a rally in the broader market, with benchmark equity indices BSE Sensex and Nifty 50 extending gains for the sixth straight session. Sensex and Nifty ended today’s trading session up nearly 1.4% at 77,984.38 and 23,658.35, respectively.

The Indian equities market has been on a steady recovery path since last week on expectations of a rate cut by the RBI, strong foreign and domestic capital inflows, and growing investor confidence.

The BSE Fast Moving Consumer Goods services sectoral index ended 0.5% higher at 19,373.12 today, with Honasa emerging as the third-biggest gainer. The stock ended 6.3% higher at INR 234.65 on the BSE.

Honasa Trading 24% Below IPO Price: Despite the big gains today, shares of Honasa are currently trading over 24% lower than the IPO issue price of INR 324 apiece.

Rising competition in the beauty and personal care (BPC) segment and a change in its business model have hit Honasa’s growth and the company is struggling to scale up its business.

Honasa’s consolidated net profit was almost flat at INR 26 Cr in the December quarter of the ongoing fiscal year (Q3 FY25) as compared to INR 25.9 Cr profit it reported in the year-ago quarter.

Operating revenue grew a modest 6% to INR 517.51 Cr during the quarter under review from INR 488.22 Cr in Q3 FY24.

The company’s market valuation fell below the $1 Bn mark after it posted a net loss of INR 18.6 Cr in the preceding September quarter, with its operating revenue declining 7% YoY to INR 461.8 Cr during the quarter.

Honasa’s transition from a super-stockist-led distribution model to a direct distributor model under its “Project Neev” took a toll on its financial health in the previous quarters. Further, the D2C major was also involved in a row with its distributors. In November last year, distributor body All India Consumer Products Distributors Federation (AICPDF) accused Honasa of engaging in unethical stock dumping practices. However, Honasa refuted these allegations.

In its Q3 earnings statement, the company said that it had replaced super stockists with higher quality or Tier-I distributors to service retailers across top 50 cities.

However, the stock has suffered significant losses amid these changes. Honasa shares have tanked over 11% on a year-to-date basis and are trading 60% lower than their peak of INR 546.50.