Honasa Consumer’s revenue rebounds in Q3; profits remain flat

Honasa Consumer, the parent company of Mamaearth, reported a jump in revenue for the third quarter of FY25, boosted by growth in its emerging brands and beauty and personal care segment.

Honasa reported revenue from operations of Rs 517.5 crore in Q3 FY25, marking a 5.9% year-on-year (YoY) increase from Rs 488.2 crore in Q3 FY24, according to its filing with the Bombay Stock Exchange (BSE). The company also returned to profitability after a weak Q2.

Honasa posted a net profit of Rs 26 crore in Q3 FY25, largely unchanged from the same period last year, but a sharp recovery from a loss of Rs 24.3 crore in Q2 FY25. The company’s EBITDA margin stood at 5.0% for the quarter, while Profit After Tax (PAT) remained at Rs 26 crore.

"Our gross margin improved by 200 basis points this quarter, reaching 72%, primarily due to better sourcing and optimized ad spends," Alagh explained. The company is also rationalizing its marketing expenditures, ensuring a balance between customer acquisition costs and brand visibility.

"We have reduced our digital ad dependency by 15%, shifting towards influencer marketing and traditional media for a more sustainable brand recall," added Alagh.

For the nine-month period ending December 2024 (9M FY25), revenue reached Rs 1,533.3 crore, reflecting a 5.8% YoY increase. Adjusting for a one-time inventory correction in Q2, revenue stood at Rs 1,596 crore, marking a 10.2% YoY growth.

Honasa’s revenue came entirely from its beauty and personal care segment, covering skin, hair, and baby care products. It also earned Rs 19.2 crore from non-operating activities, bringing its total revenue to Rs 536.7 crore for the quarter.

The company said its other brands—The Derma Co., Aqualogica, BBlunt, and Dr. Sheth’s—posted over 30% YoY growth year-to-date (YTD), the company said in a statement.

While Mamaearth remains the company’s flagship brand, Honasa Consumer also operates The Derma Co, BBlunt, Dr Sheth’s, Aqualogica, BBlunt, and Staze 9to9.

In an investor call, Co-founder and CEO, Varun Alagh said "We have seen a 37% year-on-year growth in revenue, driven by strong demand across our core brands. Our D2C platform contributed nearly 40% to total sales, while offline retail expanded to over 100,000 outlets."

Additionally, under ‘Project Neev,’ Mamaearth said it has completed the appointment of Tier I distributors across the top 50 cities, strengthening its distribution network. Through the strategic rollout of Project Neev, the company has been able grow its market share and household penetration.

The company said it has been able expanded its distribution network by 22% YoY, reaching over 2.16 lakh FMCG retail outlets as of December 2024, according to NielsenIQ data.

"We are targeting 150 exclusive brand outlets by the end of next year, up from our current 90. Our goal is to ensure that our products are accessible to consumers across Tier I and Tier II cities," Alagh noted.

Stock performance

Honasa reported a decline in financial performance since its initial public offering (IPO) in November 2023. Honasa Consumer's stock debuted at an IPO price of Rs 324 per share, opening at Rs 330 and reaching an intraday high of Rs 340.45 on its first trading day.

However, subsequent trading sessions saw the stock plummet nearly 21% below its IPO price, hitting a low of Rs 256.30. Despite this initial decline, the stock later recovered, climbing over 45% from its IPO price, though it has remained volatile due to financial pressures and shifting investor sentiment.

On Feb 12, 2025, shares of Honasa Consumer dropped 1.8% to hit a record low of Rs 197.15 on the BSE today (February 12), marking a new 52-week low ahead of its third-quarter financial results.

The decline extended the stock’s losing streak over the past five trading sessions. However, rebounding from its losses, the stock was trading 3.36% higher at Rs 207.

Struggles

In its last quarter Honasa Consumer reported its first quarterly loss in five quarters, posting a net loss of Rs 19 crore for the July-September period, compared to a profit after tax (PAT) of Rs29 crore in the same period last year. The company's revenue also declined 7% year-on-year (YoY), falling from Rs 496 crore to Rs 462 crore.

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Explained: How distribution woes, inventory correction hit Mamaearth stocks

Mamaearth has previously faced criticism over its inventory management. A few months ago, distributors under the All India Consumer Products Distributors Federation (AICPDF) accused the company of pushing excess inventory into the market and delaying the replacement of damaged and expired goods, resulting in losses estimated between Rs 50-100 crore for distributors.

The company took a Rs 70 crore hit in the quarter as it revamped its offline business model, shifting from supplying to super stockists to dealing directly with distributors. This transition, aimed at strengthening its offline presence by eliminating an intermediary layer, left the company with unsellable inventory.