Tale of the Tape 

Good evening everyone. New week same sh!t. 

Markets continued to grind lower. Nifty and Sensex seesawed in a range to eventually end in the red. Midcaps were flat, while Smallcaps (-0.5%) took a hit. The advance-decline ratio was in favour of the bears (3:2). Check out the Stocktwits Sentiment Meter:

It was a mixed-bag kinda day for sectors. IT (-2.3%) and Oil & Gas (-1.6%) were the top losers. Metals (+1.9%) and FMCG (+1%) saw the most buying.

Honasa Consumer (-20%) got hit by a storm of bad results and downgrades. WTF is going on? Read our top story to understand Mamaearth’s fall from grace.

Bajaj Finserv AMC is launching a new fund offer. More details below on all the deets you need to know.

City gas distribution firms and metal stocks saw BIG movements today. Check out their charts below to find out more.

Results reaction. Hero MotoCorp rallied +5% intraday on a strong Q2 show. Bharat Dynamics fell -5% after its Q2 PAT fell -17% YoY.

Fusion Micro Finance was locked in a -5% lower circuit. CLSA cut their 12-month target price to Rs 155 p/sh post weak results. Bharat Forge hit an over 6-month-low after Jefferies said it sees a -16% downside from current levels, citing weak Q2 numbers.

Rail Vikas Nigam was in focus after bagging a Rs 295 cr order from the South Central Railway.

ACME Solar Holdings hit a +10% upper circuit after its subsidiary bagged financing of Rs 3,753 cr from REC for clean energy projects.

Here are the closing prints:

Stock
MamaEarth Got No Buyers!

Honasa Consumer was locked in a -20% lower circuit! The stock fell below its IPO price on the back of terrible Q2 results, brokerage downgrades and concerns over its offline business. Let’s get into it.

ICYMI - Honasa reported its first loss in five quarters. But why this happened is a little complex. Let’s start with the core problem: ‘Mamaearth’, which is the firm’s main brand, has been slowing down. In FY24, it saw only single-digit growth. Other verticals (Derma Co, Aqualogica) have been picking up the slack.

One reason for this is that Mamaearth’s offline retail strategy sucked. It depended on what it calls ‘super stockists’ who are basically an intermediary between the firm and the distributors. Turns out, they didn’t do a great job. In July a distributor industry group raised red flags over “unsold inventory” and bad quality stocks; the company denied it then. In its Q2 results, Honasa disclosed it had written off Rs 65 cr worth of Mamaearth’s offline distribution stock. Yikes.

Here are its key stats:

• Revenue: Rs 462 cr; -7% YoY (vs Est: Rs 510 cr)

• EBITDA loss: Rs 31 cr

• Loss: Rs 19 cr; (vs Est: Rs 6 cr profit)

Big Picture: Honasa is trying to turn around its offline strategy by working directly with distributors. But analysts at Citi say it could require a complete strategic rethink with a focus on fewer SKUs. Almost every brokerage has cut their earning estimates, with a few saying a bounce-back could take more than 6 months. We’ll have to see how quickly the ship can be turned around. But the bigger issue is that once your ability to grow comes into question, the market loses trust. 

Honasa Consumer is -30% YTD.

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