Shares of Honasa Consumer, the parent firm of beauty brand Mamaearth, nosedived on Monday hitting a record low following its second-quarter results where the company reported its first loss since its market debut.

What Happened: The company posted a loss of ₹18.5 crore compared to a profit of ₹29.4 crore in the same period last year. Revenue from operations stood at ₹461.8 crore, a 6.9% year-on-year fall from ₹496.1 crore. 

Brokerages turned bearish on the stock following its weak quarterly results. Investors were also unimpressed as the stock hit a 20% lower circuit, reaching a record low of ₹297.25, which is below its IPO price of ₹324.

JPMorgan had an “underweight” rating on Honasa, with the target price lowered to ₹330. The company posted a weak Q2, with an EBITDA and PAT loss of ₹30.7 crore and ₹18.5 crore, respectively, the brokerage noted. In addition to the impact of inventory corrections, management acknowledged slowing growth for its flagship Mamaearth brand leading JPMorgan to reduce its earnings estimates for FY25-26.

Jefferies has a “buy” rating on Honasa, with the target price reduced to ₹425. While the larger-than-expected inventory correction and losses were disappointing, comments from the founders about reworking their strategy have added further uncertainty, it noted. According to the brokerage, the stock is likely to face pressure, and investors looking to exit may feel trapped due to low liquidity.

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Kotak Securities had a “reduce” call for the company with a target price of ₹340. Kotak noted that the company reported an EBITDA loss of ₹30.7 crore due to stock returns, provisions, and operating deleverage. Inventory correction also had a significant impact, reducing the gross margin and EBITDA margin by 230 basis points and 1,070 basis points, respectively. The brokerage sees Mamaearth’s FY25 revenue to likely fall below FY23 levels. It expects EPS to grow by 115.7% in FY26 and by 45.0% in FY27.

Antique Broking also maintained its “hold” call but cut the price target to ₹390 from ₹450. The brokerage said that Honasa Consumer's performance in Q2FY25 was disappointing, mainly due to an inventory correction in the general trade channel. As a result, the brokerage has revised its earnings estimates downward by 51%, 25%, and 25% for FY25, FY26, and FY27, respectively.

Antique analysts now expect a moderation in growth momentum, projecting Honasa to deliver a sales and PAT compound annual growth rate (CAGR) of 16% and 24%, respectively, over FY24–27.

Price Action: Honasa Consumer’s shares were locked in the 20% lower circuit at ₹297.25 on Monday morning.

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