Goldman Sachs has downgraded Honasa Consumer, the parent company of Mamaearth, to “Neutral” from “Buy,” and significantly reduced its target price to ₹375 from ₹570. The brokerage attributes the downgrade to a reset in Mamaearth’s business trajectory, which has delayed earnings expectations.
In Q2FY25, Honasa reported a revenue decline of 6.9% year-on-year to ₹461.8 crore, compared to ₹496.1 crore in Q2FY24. The EBITDA swung to a loss of ₹30.7 crore from a profit of ₹40.2 crore, while PAT registered a loss of ₹18.5 crore against a profit of ₹29.4 crore in the same period last year.
Goldman Sachs highlighted that the revenue contraction was driven by inventory corrections and a slowdown in growth for Mamaearth’s core brand. However, the company’s derma skincare brands continued to perform well. Despite the long-term potential in science-based skincare, Goldman notes that repositioning Mamaearth will require time.
