Mamaearth parent Honasa Consumer Ltd. is beginning to win back investor confidence after delivering a strong December quarter marked by robust growth, sharp margin expansion, and improving profitability. While brokerages acknowledged the operational turnaround and raised estimates, their outlook diverged on whether the recovery is fully priced in.
Goldman Sachs said the beat was largely driven by stronger growth and a sharp reduction in other expenses, highlighting that operating leverage is beginning to reflect in earnings. The brokerage raised its earnings estimates and increased its price target to Rs 330, but maintained a “Neutral” rating, suggesting valuations already reflect much of the recovery.
Jefferies, however, struck a more optimistic tone, reiterating its “Buy” rating and raising its price target to Rs 500. The brokerage said EBITDA and profit came in well ahead of expectations, prompting earnings upgrades of 17-21%.
Honasa reported revenue growth of about 16% year-on-year in the third quarter, exceeding expectations, with underlying sales growth even stronger when adjusted for channel changes. More importantly, profitability surged. EBITDA margins expanded sharply to around 10.9%, up from roughly 5% a year earlier, driven by cost efficiencies, lower overheads, and improving operating leverage.
Younger Brands Lead Growth Revival
The recovery was led by Honasa’s newer brands and focus categories. Excluding Mamaearth, younger brands now account for more than half of the company’s revenue and grew about 25% year-on-year. Derma Co, in particular, has emerged as a key growth engine, achieving double-digit profitability while continuing to scale rapidly.
Mamaearth itself, which had seen slowing growth, returned to double-digit expansion during the quarter, reflecting improved marketing effectiveness and product repositioning.
Jefferies noted that Honasa’s focus categories – which contribute roughly 75% of revenue – grew around 25%, and management expects sustained momentum through FY27.
Offline Strategy Strengthens Outlook
Honasa’s offline expansion and distribution overhaul are also beginning to show results. After restructuring its distributor network and improving inventory management earlier in the year, secondary sales and modern trade channels saw strong growth.
The company now has a presence in over 270,000 retail outlets and continues to expand its offline footprint, complementing its digital-first strategy.
Brokerages highlighted that operating leverage is likely to strengthen further as advertising costs decline as a percentage of revenue and scale efficiencies improve. Management expects gradual margin expansion over the medium term.
The strong quarter marks an important milestone in Honasa’s transition from high-growth startup to profitable scaled player. While Jefferies sees further upside driven by sustained growth and margin gains, Goldman Sachs remains cautious, citing valuation considerations despite improving fundamentals.
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