Honasa Consumer stock plunges 18%, takes two-day fall to 35%; here are share price targets

Shares of Honasa Consumer Ltd tumbled 18 per cent in Tuesday's trade, in addition to a 20 per cent plunge in the previous session, after a weak set of September quarter results.

Honasa’s Q2FY25 earnings print was below expectations due to higher than anticipated impact of inventory correction, weaker than expected performance in Mamaearth and challenging demand scenario.

The management highlighted that structural changes to existing playbook are required with changing operating landscape.

"We like the management’s intent in terms of identifying execution gaps. However, given the tough environment & various pilots/transitions underway; the ramp up in offline channel will be gradual & take few quarters before reverting to normalised growths. Factoring weak Q2 and a more gradual recovery, we trim FY25-27E earnings by 17-34 per cent, revising DCF based target price to Rs 410," JM Financial said.

The brokerage said the Honasa Consumer stock is likely to remain under pressure in the near term and the pace of recovery in sales growth will be key monitorable.

The stock fell 17.98 per cent to hit a low of Rs 242.60. With this, the stock is down 34.70 per cent in two sessions.

Honasa’s Q2 revenue declined 6.9 per cent YoY, largely pulled down by higher-than-expected impact from one-time GT inventory correction exercise. Kotak said new brands growth continued to be robust at 30 per cent YoY, with improved margins.

"The share of focus categories (face washes, sunscreens, face serums) contribution is 50 per cent. GM declined 70 basis points YoY to 68.8 per cent. Stock returns, provisions, and operating deleverage resulted in an Ebitda loss," Kotak Institutional Equities said.

Among other brokerages, Emkay Global downgraded Honasa Consumer Ltd to 'Sell' from 'Buy' rating and cut its target price by 50 per cent, saying Q2 print was weak and the ride ahead is bumpy. The brokerage has 'conservatively' cut its earnings expectations by 35 per cent over FY25-27. It has chopped its revenue expectations by 9-16 per cent and cut margin expectations, given reduced operating leverage benefits.