Mamaearth's Meteoric Rise: 20% Share Surge, ₹30 Crore Profits, and Dominating FMCG Growth in Q2FY24 Revealed!

Mamaearth, the digital skincare brand operating under Honasa Consumer, witnessed a remarkable upswing in its share value, soaring by 20% to hit the upper circuit following the disclosure of its Q2FY24 financial results. This surge marked a significant milestone as the company unveiled its inaugural quarterly earnings post its stock market debut. The shares achieved a record high of ₹422.50 on the Bombay Stock Exchange (BSE).

                          image credit: pexels

Honasa Consumer, the parent company steering Mamaearth, reported a robust financial performance for Q2FY24, revealing a net profit of ₹30 crore. This impressive figure reflected a doubling of profits compared to the corresponding period in the previous year. Concurrently, the revenue from operations displayed notable growth, increasing by 21% to reach ₹496 crore.

In a sector characterized by fast-paced evolution, Mamaearth, operating as a direct-to-consumer (D2C) unicorn, outpaced the broader industry's median growth. The company's revenue surged by an impressive 33% during the first half of FY24, while the fast-moving consumer goods (FMCG) industry at large experienced a median growth rate of a mere 9%.

Varun Alagh, the Chairman and CEO, expressed satisfaction with the company's performance, stating, "Our business has grown by 33 percent Year-on-Year in H1FY24, which is 3.8 times the median growth of FMCG companies in India."

Noteworthy is Honasa Consumer's adept management of working capital, maintaining a negative working capital of minus 5 days in H1FY24. This signifies efficient operational financial management. Furthermore, the company's offline distribution network witnessed a substantial YoY growth of 47%, reaching an extensive network of 1,65,937 outlets.

In the second quarter, Honasa Consumer's EBITDA exhibited robust growth, escalating by 53% YoY to ₹40 crore. This surpassed estimates by 25%, attributed in part to a one-off reversal of ESOP costs stemming from the scale-down of the Momspresso business. Adjusted for this factor, EBITDA still demonstrated a formidable 35% YoY growth, surpassing estimates by 11%. The outperformance was primarily driven by enhanced margin expansion, aligning with expectations even as revenue remained consistent.

In summary, Mamaearth's stellar financial results underscore its capability to deliver market-beating growth, enhance profitability, and outperform industry benchmarks. This positions Mamaearth and its parent company, Honasa Consumer, as significant players in the evolving landscape of the FMCG sector.

Notably, Honasa Consumer maintained a negative working capital of minus 5 days in H1FY24, indicating efficient management of its operational finances. The company's offline distribution network expanded by 47% YoY, reaching 1,65,937 outlets.

During Q2, Honasa Consumer's EBITDA experienced robust growth, surging by 53% YoY to ₹40 crore. This exceeded Jefferies' estimates by 25%, attributed in part to a one-off reversal of ESOP costs due to the scale-down of the Momspresso business. Adjusted for this factor, EBITDA still exhibited a formidable 35% YoY growth, surpassing estimates by 11%. The outperformance was primarily driven by improved margin expansion, even as revenue aligned with expectations.

In summary, Mamaearth's stellar financial results underscored its ability to deliver market-beating growth, enhance profitability, and outperform industry benchmarks, positioning it as a notable player in the evolving landscape of the FMCG sector.