A quiet launch for Honasa Consumer: Is it better to buy, sell, or keep Mamaearth stock?

 A quiet launch for Honasa Consumer: Is it better to buy, sell, or keep Mamaearth stock?

Honasa Consumer shares were listed for Rs 330 on the NSE and Rs 324 on the BSE, compared to the Rs 324 issue price.

Analysts now advise investors to sell their holdings and record gains.

On November 7, Honasa Consumer, the parent company of Mamaearth, debuted tepidly on the stock exchange. Shares with an issue price of Rs 324 are listed at Rs 330 on the NSE and Rs 324 on the BSE. A number of experts now advise investors to book gains and reduce their stakes due to dangers associated with operations and poor financial performance.

Honasa Consumer offers a wide range of products, including perfumes, color cosmetics, body care, hair care, and face care.

However, Shivani Nyati, Head of Wealth at Swastika Investmart Ltd., noted that "the company's financial condition is facing a bit of movement and there are other operation-related dangers as well."  Nyati advised investors to take a profit and sell their stock.

The initial public offering (IPO) of Mamaearth was successfully completed, with qualified institutional bidders (QIBs) purchasing 11.5 times the quota, but individual investors remained cautious and only subscribed 1.4 times.

In contrast to the previous year's profit of Rs 14.4 crore, the firm had a net loss of Rs 150.9 crore for the year ending March 2023, mostly due to the impairment loss on goodwill along with additional intangible assets.

Mamaearth continues to arouse caution in Prashanth Tapse, Sr. VP Research analyst at Mehta Equities, due to the company's loss-making nature, large percentage of OFS, intense rivalry with margin pressure, minimal promoter ownership, and poor financials.

While risk-takers could think about keeping the stock for a long time in anticipation of significant product growth, Tapse recommends prudent investors allocated to the company to book gains.

In terms of operating revenue for the fiscal year FY23, Honasa Consumer asserts that it is the biggest digitally-first beauty and personal care firm in India. Since its 2016 introduction, the Mamaearth brand has grown at the quickest rate among BPC brands in India, achieving an annual turnover of Rs 1,000 crore in only six years.