Inside Mamaearth’s Reset: After Losses & Leadership Churn, Can The Alaghs Rebuild?

It wasn’t easy for Honasa founders Varun and Ghazal Alagh to face shareholders’ ire when Mamaearth’s parent sank into losses by the middle of FY25 after tasting profits in the previous fiscal year. 

The beauty and personal care (BPC) company’s revenue increased 8% on-year to INR 2,066.9 Cr in FY25, but profits plunged 32% to INR 72.6 Cr.

Honasa Consumer turned cash flow negative with the topline crumbling 7% in the first six months of FY25, driving the company’s stock down 40%. Honasa slipped into INR 18.6 Cr losses in Q2 of FY25 after almost a year of reporting profits. 

The company, however, picked up growth in the latter half of the fiscal year. Market analysts and brokerages too downgraded the ratings for Mamaearth for its muted earnings and loss of market capitalisation. 

The company’s business strategy, marketing overdrive and product quality faced shareholders’ wrath after the setback, while its go-to market venture for offline retail, Project Neev, received backlash from superstockists and vendors who were distributing Mamaearth and other Honasa brand inventories to traders and retailers across the country. 

The challenges deepened with a churn in the company’s top leadership, which involved chief business officer Zairus Master and chief product and technology officer Jayant Chauhan.

Honasa chairman Varun Alagh described FY25 as a year of learnings, focussed execution and necessary corrections. A round of revamp followed.

The revival measures seem to have started paying off for Honasa. The company delivered fairly good financials in the first quarter of FY26, with the net profit rising 2.4% to INR 41.3 Cr and operating revenue regaining 7% to INR 595.3 Cr. The Honasa shares rallied 14% in response a day after the earnings results. The appointment of retail veteran Yatish Bhargava as the chief business officer in June was also pivotal to the turnaround. 

But the story doesn’t end there. In fact, it makes a new beginning, setting fresh challenges before the Alaghs to ensure that the double-digit growth momentum in topline sustains through FY26 with strong unit economics to remain profitable in an increasingly crowded market. 

It’s time to look into Honasa and Mamaearth’s rescripted playbook.  

Honasa Sharpens Focus On Owned Brands 

Honasa, according to its last annual report, had rolled out 122 products in 2023 alone. While product launches across multiple categories to keep up with the changing consumer preference and rising competition seemed like a good strategy, for Honasa Consumer, this had drifted the focus from its top-performing products. 

Varun Alagh said in the Q1 FY26 earnings call that the company plans to double down on six key brands – Mamaearth, The Derma Co, Bblunt, Slaze, Aqualogica and Dr Sheth’s – that together make up more than 80% of its revenues. 

While Mamaearth is the original brand from the house of Honasa, it launched The Derma Co in the sunscreen category, Aqualogica in the advanced skincare category, and Staze in the colour cosmetics category, as subsidiary brands. Honasa also acquired Bblunt, which sells haircare products, and Dr Sheth’s advanced skincare items.

“The overall growth is in single digit, but our focussed categories that contribute about 80% of our revenues are growing in double digits. This is a healthy indicator of the strategy shift. We will double down on this approach. Our key brands began growing across ecommerce and general trade in the last quarter of FY25 and are now growing in double digits.” Alagh said. 

Honasa plans to focus on niche products and work on improving the product quality and media awareness, while also approaching retailers directly in general trade. 

The company sees some green shoots in this strategy. “Three of our INR 100 Cr ARR (annual revenue run) categories in serums, face cleansers and sunscreen categories are yielding results. Nielsen’s Q1 FY26 data too shows that our retail footprints have grown to 2.4 lakh FMCG outlets across India as of Jun 2025, marking a 20% on-year increase in distribution,” Alagh said.

Honasa Consumer plans to introduce more categories under each brand in sync with the growing awareness among its consumers.

Push For Innovation And Renovation

“Across brands, we’ve done effective innovations with strong launch rationale. Apart from innovation, renovation, too, continues to be a very strong focus area for us. Achieving product superiority tops our priorities and we are trying to improve product quality across portfolios,” said the CEO.

Gazal Alagh heads Honasa’s product and innovation wing which focusses on building product formulations based on consumer searches online and trend-based searches on Google and on social media platforms. 

She faces a steeper challenge with the skincare market in India making rapid transformation since active ingredients-based products, Korean formulations and cruelty-free formulations started gaining traction. 

Ingredients like salicylic acid, niacinamide, and rosemary oil are gaining popularity, with many of them becoming viral on social media. The concept of ‘skinification’ is also expanding, with skincare ingredients now being incorporated into haircare, body care, and makeup products. 

“Consumers are no longer satisfied with just the superficial benefits of beauty products, they want results that improve skin and hair health over time. Brands that prioritise ingredient transparency and education will continue to gain traction,” suggests a report by consulting firm Redseer. 

Running On A Simmering Turf

The beauty products space, more precisely, the $8.4 Bn skincare segment, is in the middle of a wave of consolidation with marketplaces like Nykaa and Purplle rolling out their exclusive lines, Bollywood celebrities like Katrina Kaif, Deepika Padukone and Kriti Sanon foraying into the market, and big-ticket acquisitions like that of HUL taking over Minimalist at a four-fold valuation.

The hyperdynamic state in the market, which is likely to grow 7.8% a year to reach $17.1 Bn by 2033, has triggered a shift in the industry towards premiumisation with a seemingly upbeat purchasing behaviour of consumers, according to the Redseer report. 

This has consequently raised the bar for Honasa and Mamaearth to invest more on innovation and bring in a premium range, even though its brand recall has been more in the affordable segment. 

“The long-term levers for us would be to continue to leverage the data and technology that continues to be a very strong part of all decision-making that we do, even within the company today, with LLM applications being central to this strategy. We have also renewed our partnerships with Meta and Google for the go-to-market strategy as competition intensifies. Apart from the right distribution partnerships – be it with offline traders or ecommerce and quick commerce platforms – are going to be central,” Alagh said. 

Bullish On Q-Com, Omnichannel

Quick commerce will continue to drive the biggest chunk of sales for Honasa’s brands, affirmed the CEO. 

“It’s not about ecommerce versus general trade, it’s more about quick commerce versus offline, for us. And, across our focus categories, we have seen higher shares from quick commerce than ecommerce and any transition happening towards this revenue mix is a healthy sign for us,” Alagh said. 

He reiterated that the company has enough cash flows to prioritise higher commission-led quick commerce strategy and the demand has been uniform from across markets and geographies. “We have seen the demand majorly coming from the North. Now, we are planning to expand in the South, while being focussed on the right mix to reach out to these markets.” 

Inc42 had reached out to the dealers and stockists who alleged that due to the declining demand in the offline market for Mamaearth products, the SKUs were being returned which, in turn, led them to pull out the stocks and raise invoices.

The Mamaearth management, however, ruled out any major inventory loss in Project Neev, despite some initial hiccups. “Around 50% of our inventories are well within our control and now under direct distribution model. We are building up on this strategy. We have zero credit overdues and a very healthy credit cycle,” Alagh asserted. 

While Mamaearth’s leadership sees profit momentum building up from the omnichannel strategy, two of its key bets – quick commerce and offline retail – are cost-intensive. Honasa needs to work out a more effective cost management strategy that will not hurt the confidence of retail investors in the long term.

[Edited By Kumar Chatterjee]