Mamaearth Q2: PAT Surges 94% To INR 29.4 Cr

Honasa Consumer Ltd, the parent entity of D2C unicorn Mamaearth, reported a profit after tax (PAT) of INR 29.4 Cr in the September quarter (Q2) of the financial year 2023-24 (FY24), a jump of almost 94% from INR 15.2 Cr in the year-ago quarter. 

Operating revenue also increased 21% to INR 496.1 Cr from INR 410.5 Cr in Q2 FY23.

Founded in 2016 by the husband-wife duo Varun and Ghazal Alagh, Mamaearth sells a range of beauty and personal care (BPC) products across categories including hair care, body care, and makeup. Its parent entity Honasa runs other brands – The Derma Co., Aqualogica, Ayuga, BBlunt, and Dr. Sheths.

Speaking about its Q2 FY24 results, Varun Alagh, chairman and CEO of Honasa Consumer, said, “Honasa has been able to deliver market-beating growths and constantly improve the profitability portfolio of the company. Our business has grown by 33% YoY in H1 FY24 which is 3.8 times the median growth of FCMG companies in India.”

“Our profits grew much faster than our revenues, with H1 PAT growing by 1,377% to INR 54 Cr. Dr Sheths has become the 4th brand from Honasa portfolio to enter the 150 Cr club after Aqualogica and Derma Co,” he said.

It is pertinent to note that Mamaearth slipped into the red in FY23 with a net loss of INR 151 Cr. Meanwhile, its PAT stood at INR 54.1 Cr in H1 FY24.

In a statement, Honasa said while FMCG companies’ median year-on-year (YoY) growth was 9%, Honasa’s YoY growth was 33% in H1. 

In H1 FY24, the company delivered INR 960.6 Cr in sales revenue, which stood at INR 1,492.7 Cr in FY23.

How Did The D2C Unicorn Spend In Q2?

Mamaearth’s total spending jumped 18.2% to INR 464 Cr in the September quarter from INR 392.3 Cr in the corresponding quarter of last year.

In that, the startup’s spending towards purchases of traded goods declined a little over 1% YoY to INR 145.4 Cr in Q2.

On the other hand, Mamaearth’s employee benefit expenses also declined to INR 37.1 Cr in the reported quarter from INR 39 Cr in Q2 FY23, which the company attributed to the shutdown of its Momspresso platform.

Inc42 had reported exclusively in June this year about Mamaearth’s restructuring at Momspresso due to increasing losses.

In its financial filing with the exchange, Honasa said that the promoters of Momspresso were also entitled to retention bonus from the holding company in the form of employee stock options, subject to vesting conditions. During the quarter, the promoters of Momspresso resigned from their employment and the vesting conditions of ESOPs were not fulfilled. 

“Accordingly, the Group has reversed the share based payment expense of INR 47.47 Mn (INR 1.7 Cr) during the current quarter. The Holding Company has also acquired the remaining stake in Momspresso on September 12, 2023 based on the Share Purchase Agreement entered on August 25, 2023 for a consideration of INR 230.08 Mn (INR 23 Cr). 

Honasa also said that Just4kids Services Private Limited (Momspresso) was acquired to expand content and influencer management capabilities and to strengthen content creation capabilities by enabling access to a large and ready library of relevant content. However, the performance and profitability of Momspresso was deteriorating with the business significantly underperforming vis-a-vis the business plan during the year ended March 31, 2023. 

“Accordingly, the Group has accounted for an impairment loss of INR 1,360.63 Mn (INR 136 Cr) attributable to goodwill, INR 19.14 Mn (INR 1.9 Cr) attributable to software and INR 167.20 Mn (INR 16.7 Cr) attributable to trademarks and the same has been disclosed as an exceptional item during the year ended March 31, 2023,” the company said.

Shares of Mamaearth ended Wednesday’s (November 22) trading 4% lower at INR 352.1 on the BSE.