Honasa Consumer shares in focus as Mamaearth parent reports 94% jump in Q2 profit

Shares of Honasa Consumer Ltd (Mamaearth) will be in focus on Thursday morning after the largest digital-first beauty and personal care company reported a 94 per cent year-on-year rise in its profit at Rs 29 crore in the September quarter. Honasa Consumer said its revenue for the quarter was up 21 per cent YoY at Rs 496 crore and that like-for-like growth of continuing business stood at 24 per cent. The sales growth was lead by 27 per cent YoY jump in volumes, Honasa Consumer said in a BSE filing.

Ebitda for the quarter, Mamaearth said, was up 53 per cent YoY at Rs 40 crore. The newly-listed company said it increased its offline distribution to 1,65,937 outlets, up 47 per cent YoY growth, adding that Mamaearth entered top 15 BPC brands in India, ahead of many legacy brands.

Chairman and CEO Varun Alagh said the beauty market in India was brimming with opportunities and that his company was receiving a lot of consumer attention.

"Honasa has been able to deliver market beating growths and constantly improve the profitability portfolio of the company. Our business has grown by 33 per cent YoY in H1 FY24 which is 3.8 times the median growth of FCMG companies in India. Mamaearth, our largest brand has entered the Top 15 BPC brands in India, overtaking many legacy

brands, as per a report by Jefferies. Our profits grew much faster than our revenues, with H1 PAT growing by 1,377 per cent to Rs 54 crore. Dr Sheths has become the 4’th brand from Honasa portfolio to enter the Rs 150 crore-club after Aqualogica and Derma Co," he said.

Alagh said Honasa Consumer would continue to deliver on its commitments to business, consumers and investors.

Shares of Honasa Consumer debuted on November 7. At Wednesday's closing price of Rs 352.10, the stock was up 8.67 per cent over its issue price of Rs 324. Jefferies recently initiated coverage on this stock with a high conviction Buy call and a target of Rs 520. The foreign brokerage expects Honasa Consumer to grow at 27 per cent compounded annually over FY23-26 with improved margins. It said Honasa Consumer has a significant moat as a scaled-up internet-first franchise and that even as the online remains at the core, Honasa derives a third of its revenues from offline now, it noted.

"While Honasa Consumer continues to be the leader in the digital BPC sector, the company has build a strong offline distribution as well. As per NielsenIQ, brands of Honasa Consumer retailed at 1,65,937 retail outlets in September 2023, an increase of 47 per cent in offline distribution YoY. With a focus on increasing distribution across general and modern trade chains and exclusive brand outlets," the company said on Wednesday in a BSE filing.

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