Mamaearth Jumps 20% Intraday After Q2 Earnings

Shares of Honasa Consumer Ltd, the parent entity of D2C unicorn Mamaearth, jumped 20% during the intraday trading on Thursday (November 23) to touch the upper band and a record high at INR 422.5 on the BSE following the company’s Q2 FY24 earnings announcement.

Mamaearth on Wednesday posted a profit after tax (PAT) of INR 29.4 Cr in Q2, registering almost a 94% jump year-on-year (YoY), while its operating revenue also increased 21% to INR 496.1 Cr.

In fact, the company’s bottom line seems to be improving overall. In FY23, Mamaearth had posted a loss of INR 151 Cr. While it’s yet to be seen how the startup performs in this entire fiscal year, it reported a PAT of INR 54.1 Cr in H1 FY24.

The startup said that 40% of its revenue growth came from online operations while growth in revenue from offline channels stood at 33% in H1 FY24. It also claimed that quick commerce has emerged as a strong channel and is witnessing over 100% YoY growth.

This was the first time the company filed its quarterly financial statements after it went public earlier this month.

The D2C unicorn made a muted debut on the Indian bourses. While it listed at nearly a 2% premium on the NSE, the shares debuted flat at INR 324 on the BSE. Its loss-making book was a major reason that negatively impacted its public listing.

Amid the ongoing funding winter, investors are focusing on profitability of new-age tech companies, both listed as well as unlisted ones. Shares of startups like Zomato, Paytm, and PB Fintech have surged this year after the bloodbath of 2022 on the back of improvement in their bottom lines.

Following its IPO, Jefferies initiated coverage on Mamaearth with a ‘buy’ rating and a target price of INR 520. In its latest research note, the brokerage said that the company’s growth priority seems to be positive at a time when FMCG incumbents are trying to tilt more towards profitability over growth.

However, Jefferies also pointed out the increasing competition in the beauty and personal care space (BPC).

“Growing clutter is seen as a risk, given rising interest from foreign brands, FMCG incumbents, and D2C in the masstige and premium BPC. This would also require Honasa to constantly innovate, which entails some execution risk,” the brokerage said.

Shares of Mamaearth were on an uptrend since the beginning of the week but fell during yesterday’s trading. Currently, the stock is trading over 30% higher than its listing price.