Honasa Consumer shares recover losses on Friday after downward spiral

Shares of Honasa Consumer Ltd, the parent of skincare brand Mamaearth, which fell as much as 15% in early trade Friday, recovered to end the day up 7% on the National Stock Exchange.

However, at its closing price of Rs 323.50, Honasa’s stock is still a shade below its issue price of Rs 324, and the listing price of Rs 330 per share. It touched a low of Rs 256.30 in today’s session on the NSE.

As of day’s end, Honasa Consumer’s market capitalisation stood at Rs 10,408 crore, but had slipped to Rs 8,246 crore (less than $1 billion) before recovering. The company’s IPO valuation was around Rs 10,425 crore.


Honasa’s last private round in 2022 valued the omnichannel retailer at $1.2 billion, or around Rs 9,995 crore at Friday’s exchange rate.

Honasa Consumer made its debut on the NSE on Tuesday at Rs 330 per share, a modest 2% premium over the issue price, but has seen heavy selling since.

The Honasa IPO opened on October 31 at a price band of Rs 308-324 per share and closed on November 2. The company raised Rs 1,701 crore through the IPO, which included a fresh issue of Rs 365 crore and an offer-for-sale component of up to 4.12 crore equity shares worth Rs 1,336 crore.

Prior to the IPO opening for public subscription, Honasa Consumer had raised Rs 765.19 crore from anchor investors, including Abu Dhabi Investment Authority, Fidelity, Goldman Sachs, Capital Group and Norges Bank.

In an interview with ET on October 31, the company’s cofounder and chief executive Varun Alagh had advised against making a call on a company based on its short-term performance on the stock market. “If you’re trying to measure performance over 3-6 months, you should not … If you genuinely like a company, stay invested for a few years and measure our performance over the index, and that’s what one should hold the company accountable to,” Alagh had said.

Jefferies initiates coverage

Jefferies initiated coverage on the Honasa stock with a price target of Rs 520. “BPC (beauty and personal care) is likely to grow in double digits, with steady gains expected for online channels. Honasa has a strong online presence in high-growth spaces within BPC, like skincare, hair care, cosmetics etc and at massive/ premium price points,” the note said.

The research note also said that while online remained at the core of Honasa Consumer’s strategy, it derived a third of its revenues from offline now. Jefferies said it expected the company to record 27% growth over FY23 to FY26 with improving margins.

In FY23, Honasa Consumer posted a net loss of Rs 150.97 crore as against a net profit of Rs 14.44 crore in FY22. Operating revenue, however, grew 58% to Rs 1,492.75 crore. The company said that the FY23 loss was on account of an exceptional item, and it was operationally in profit during the period.