As investors continued to sell off Honasa stock in the wake of poor Q2 results, the share price continued to decline during Tuesday’s session, reaching a new 52-week low. The share price of Honasa fell 18% today, reaching an intraday low of ₹242.60 on the BSE. Monday saw a 20% drop in the company that owns FMCG brands like Mamaearth and The Derma Co.
Due to inventory adjustments, the company reported a combined loss of ₹18.57 crore for the second quarter as of last week, September 30, 2024. For the same quarter last year, the company generated ₹29.43 crore in profit after taxes.
The Honasa share price has reacted unfavourably in the recent two sessions following poor earnings, according to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One. Since this is a new listing, there isn’t enough technical information available. It will continue to underperform in the near term, thus Bhosale advised avoiding catching the falling knife and using any bounce to liquidate long positions in light of the bearish momentum.
Since its 52-week peak, Honasa’s share price has fallen 53% and more than 30% in the last week.
According to Honasa Consumer’s financial release, sales for the second quarter were ₹462 crore, indicating a growth rate of roughly 6.9%, while revenue adjusted for inventory correction was ₹525 crore, indicating a growth rate of 5.7%. Over the past six months, Honasa Consumer has been concentrating on streamlining its distribution model, according to Varun Alagh, the chairman and CEO.
It is clear that Honasa has changed from being primarily a 95% “show me” tale to merely a 5% “trust me” story, according to ICICI Securities. The company’s new brands, such as Dr Sheth’s, Aqualogica, and The Derma Co., are performing well, accounting for 35% of sales and growing by about 30%. It said that the consensus appears to be ignoring this strong performance. According to ICICI Securities, the projected revenue growth is probably being lowered from the initial projection of 20% to the low-to-mid teens.
“We reckon the stock faces near-term tussle of emotions vs. long-term (probabilistic) fundamentals. We stay believers in the Honasa team. Moving our rating with earnings cut, recommend ADD (Buy earlier) with a target price of ₹400,” the brokerage said.
