Honasa Consumer hit an upper circuit of 10% to Rs 251.55 today, its second consecutive day of gains after a sharp decline.
The stock had previously plummeted 40% in just six trading sessions, falling from Rs 369.75 on November 14th to Rs 225.35 on November 26th.The recent selloff was due to concerns raised by the All India Consumer Products Distributors Federation (AICPDF) regarding unsold inventory.
AICPDF claimed that Honasa Consumer had significant unsold inventory, leading to a financial burden of Rs 300 crore. However, the company denied these allegations, stating that the actual inventory level was much lower and that it was actively working to address the issue.
The company stated that as of 31st Oct 2024, as per data from the distribution management system implemented at Honasa distributors currently active and associated with the company, the distribution value-chain, carried a total inventory of Rs 40.69 crore, (as against the quoted figure of Rs 300 crore of near-expiry inventory by AICPDF).
Honasa Consumer attributed the recent decline to a transition in its distribution network and market scheme settlements. The company is focused on improving its stock turnover ratio and strengthening its omnichannel distribution.
Honasa Consumer is the largest digital-first beauty and personal care company with a diverse portfolio of six brands. It reported a consolidated net loss of Rs 18.57 crore in Q2 FY25 as against net profit Rs 29.43 crore recorded in Q2 FY24. Revenue from operations declined 6.90% YoY to Rs 461.82 crore in the quarter ended 30 September 2024.
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