Mamaearth parent Honasa Consumer stock soars 10% on Q3 boost

Analysts at JPMorgan downgraded the stock to ‘underweight’ with a target price of Rs 390 per share, 10 percent below its last close price

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Shares of Honasa Consumer, the parent company of direct-to-consumer (D2C) personal care brands such as Mamaearth, The Derma Co, and BBlunt, soared 10 percent to Rs 474 on February 12 after posting over a three-fold jump in net profit.

The company’s net profit zoomed three-fold from the previous year to Rs 26 crore in the third quarter of the current financial year.

Its consolidated revenue was up 28 percent at Rs 488 crore. But slower consumer demand hit the numbers sequentially. Revenue was down 1.5 percent and profit 12 percent from the September quarter.

Analysts at JPMorgan downgraded the stock to “underweight” with a target price of Rs 390 a share, 10 percent below its last closing price.

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“We see downside risk to the company’s growth expectations and lower FY25/26 EPS by 4/6 percent. While higher income helped drive an in-line Q3 financials for Honasa Consumer, their revenue and EBITDA numbers were below our estimates. Moreover, the management sounds cautious amid increased competitive intensity and soft demand environment,” the brokerage firm said in a post-result review note.

Honasa’s total expenses for the quarter were Rs 464.5 crore, up from Rs 378.5 crore a year ago and Rs 463.9 crore a quarter ago.

The company launched 122 new products in the calendar year 2023 and expanded its omnichannel distribution to over 1.7 lakh touchpoints. Its distribution network grew by 37 per cent YoY.

ALSO READ: Mamaearth Q3: Expect slowdown in short-term but will grow ahead of industry in long-term, says CEO Varun Alagh

Honasa Consumer shares have declined over 6 percent in the past month against a percent drop in the benchmark Sensex.

Honasa Consumer stock hit record high of Rs 510 a share on January 23, 2024.

Valuation-wise, the stock is at 99x/70x FY25/26 price-to-earnings (PE) ratio, which is demanding, believe analysts at JPMorgan.

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