Business News

Domestic brokerage Kotak Institutional Equities has initiated coverage on Mamaearth’s parent company, Honasa Consumer with an 'Add' recommendation for a target price of Rs 450, an upside potential of 4% from the current levels.The brokerage states that it likes Honasa’s brand seeding/scaling and execution speed. A steady increase in repeat offtakes (conversion of experimentative consumers into a sticky base + reduced dependence on innovation + rise in mix of core products) and continuous improvement in products/R&D may be able to drive the transition into a formidable BPC player from a challenger.“Three things that set it apart are successful scale-up of multiple brands (like Mamaearth, The Derma Co, Dr Sheth’s, and Aqualogica), omnichannel operations (50:50 Online:Offline) and its financial discipline: 68% gross margin, 12-13% ME EBITDA margin, TDC EBITDA break-even and positive FCF,” says Umang Mehta, analyst at KIE.KIE attributed Honasa’s success to its strong marketing acumen, flair for spotting emerging trends and capitalising on them, and nimble execution, however, also lists potential key risks of further deceleration in ME growth and a rise in competition from traditional BPC players/platforms.Honasa is India’s largest digital-first BPC player, with a portfolio of seven differentiated BPC brands. Since launching its first product in 2016, Honasa has demonstrated an enviable track record of speed and success in seeding and scaling several brands and achieving omnichannel command—all while maintaining sound financial discipline.The shares of Honasa are trading 2% higher at Rs 432 on the BSE.(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Shares of Tata Chemicals fell 4.5% to the day’s low of Rs 1,050 on BSE in Tuesday’s trade after the company reported its first-ever quarterly loss in nine years, hurt by a one-time charge incurred in its UK operations along with lower prices and demand for soda ash. Kotak Institutional Equities (KIE) recommended a ‘sell’ rating on the stock with a target price of Rs 770, which suggests a downside of nearly 29%.Tata Chemicals reported a consolidated net loss of Rs 850 crore in the quarter ended March 31, compared to a profit of Rs 709 crore a year ago.“The company reported weak earnings for 4QFY24, as expected, amid pricing pressure on soda ash across geographies. Earnings seem likely to remain near current run-rates through most of FY2025 in the context of continued oversupply; the large impairment charge in the UK is perhaps an indication,” said a report by Kotak Institutional Equities.The primary reason for the earnings to stay near current run rates, says KIE, is that US and UK domestic volumes have already contracted for CY2024, while US export volumes have contracted by more than 80% for 1HFY25. The US alone accounts for around 60% of TCL’s global soda ash sales volumes.The world soda ash market remains oversupplied; while management suggested that prices have bottomed out, there are no signs of any meaningful recovery for now, KIE added.“Despite the collapse in earnings (down from Rs91.7 in FY2023 to an estimated Rs 25.9 for FY25), the stock has held up surprisingly well, perhaps on hopes of an IPO of Tata Sons—which, however, does not seem to be happening, given news that Tata Sons is working on repaying debt to avoid going public. Any hopes around a large expansion into battery chemicals seem misplaced as well,” said Jaykumar Doshi of KIE.Also read: Should Nifty bulls 'sell in May and go away', not return until election result day?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

The shares of Varyaa Creations debuted with a premium of 90% on the BSE SME platform. The stock was listed at Rs 285 as against an issue price of Rs 135.Ahead of the debut, the company's shares had no GMP in the unlisted market.The IPO, which was completely a fresh equity issue of 13.4 lakh shares, received an underwhelming response but sailed through on the last day of bidding process.The company plans to use the net proceeds from the public offer to finance the establishment of a new showroom, capital expenditure, purchase of inventory and other general corporate purposes.Originally incorporated as Kalgi India, the company later turned into Varyaa Creations. It is engaged in the business of wholesale trading of gold, silver, precious and semi-precious stones.Apart from the above, the company said it also intends to focus on manufacturing and selling of jewellery. It manufactures the jewellery through a job worker located in Mumbai.Historically, the company has earned its revenues from wholesale trading of gold, silver, precious stone, semiprecious stone and from sales of jewellery. Currently, its products are sold only through the offline market. However, it intends to sell its products through its own online platform sometime soon.This online platform intends to facilitate and provide the customers with an experience of Phygital marketing i.e., an option to browse a variety of jewellery through its catalogue.Further moving forward, the company will be earning its revenues not only from bullion trading but also by selling products through offline market and online market.For the period ended December 2023, the company clocked revenues of Rs 17.62 crore, while profit after tax stood at Rs 3.51 crore.Inventure Merchant Banker acted as the sole book running lead manager to the issue, while Bigshare Services was the registrar.