For the quarter, Honasa Consumer posted an underlying volume growth of 21.2%. Net profit stood at ₹25 crore, down 18% year-on-year. However, the Street seems to be taking solace from the fact that revenue rose 13% to ₹534 crore.
EBITDA declined 18.5% to ₹26.9 crore, and margins contracted by 200 basis points to 5%, from 7% a year ago.
The revenue growth has the Street upbeat, as the company has been struggling on this front for the last few quarters. It also undertook an inventory liquidation exercise and reset its distribution network.
Analyst are reading the revenue reversal as an early sings of recovery. However there are concers that margin improvement remains hard to come by. The Street had been expecting operating leverage to kick in, which hasn’t materialised yet.
Also reassuring investors, core products under the Mamaearth brand, which account for about 70% of the company’s portfolio, delivered double-digit growth during the quarter.
Brokerage firm Emkay Global has retained its ‘Sell’ rating on Honasa Consumer, but raised its price target by 13% to ₹225.
The brokerage has also factored in growth improvement in the core brand and raised the target multiple to 3x sales (60% discount to traditional peer valuations) from the earlier 2.75x.
While Emkay acknowledges the better performance this quarter, it remains cautious, pointing out that a sustained recovery in growth is needed before a rerating.
The brokerage has factored in healthy growth expectations from the company’s younger brands going forward. These are estimated to contribute to over 50% of sales by FY26. Emkay expects a revenue CAGR of 16% between FY25 and FY28.
The stock has jumped 31% in the last one month. While it has recovered from low of ₹190, it’s still trading below its IPO price of ₹324.
First Published: May 23, 2025 10:37 AM IST
