Mamaearth parent Honasa's revenue falls to Rs 462 crore in Q2FY25, posts loss

Honasa Consumer Ltd., the parent company of Mamaearth, reported its Q2 FY25 financial results, revealing both growth in select areas and challenges in profitability.

The quarter ending September 30, 2024, marked a shift in the company’s distribution strategy, impacting its bottom line.

Revenue trends and profitability concerns

Honasa reported consolidated revenue from operations of Rs 461.8 crore in Q2FY25, reflecting a year-on-year decline of 6.9% compared to Rs 496.1 crore in the same period last year.

Adjusted for inventory correction, the revenue reached Rs 525 crore, a 5.7% year-on-year increase.

However, the company registered a net loss of Rs 18.57 crore due to a one-time inventory correction and expenses associated with Project Neev, a strategic distribution overhaul. This contrasts with a profit of Rs 29.43 crore in the year-ago quarter and Rs 40.2 crore in Q1FY25.

The EBITDA margin dropped to -6.6% for the quarter but adjusted to 4.1% after accounting for inventory correction. The total expenses surged 9% year-on-year but were down sequentially at Rs 506 crore.

Strategic initiatives 

Honasa CEO Varun Alagh emphasized the significance of Project Neev, aimed at transitioning from super-stockists to direct distributors in India's top 50 cities.

While this move affected short-term revenue and profitability, it is expected to strengthen the company’s offline go-to-market strategy in the long term.

“Our priority remains to strengthen our offline distribution capabilities and restore Mamaearth's growth trajectory,” said Alagh.

He highlighted a 30% year-on-year growth across emerging brands like The Derma Co., Aqualogica, BBlunt, and Dr. Sheth's in the first half of FY25, as well as a 28% growth in focus categories like sunscreens, face washes, and serums.

Market performance and innovation

Mamaearth products, particularly its face washes and shampoos, gained 125 basis points in offline value market share year-on-year as of September 2024, according to NielsenIQ data.

The company also introduced a new moisturizer range across its brands, catering to diverse consumer needs and reinforcing its innovative approach.

Financial outlook and long-term goals

Honasa's H1 FY25 revenue growth adjusted for inventory correction stood at 12.3%, outpacing competitors and driving market share gains. The company remains focused on scaling core categories to rank among the top three national leaders within three to five years.

"We are constantly learning and evolving to meet the changing needs of Indian consumers. Our long-term goals remain unwavering— to shape the future of the beauty and personal care category in India.” Varun Alagh added.