Global brokerage Jefferies maintained a ‘Buy’ rating with a target price of Rs 400, noting 7% YoY revenue growth in line with estimates. Gross margin contracted ~50 bps YoY, while A&P spending rose 3%. EBITDA margin slipped ~60 bps YoY to 7.7% (+2.6 ppt QoQ). EBITDA was flat YoY, but net profit saw slight growth, both exceeding expectations.
Also Read | Mutual fund SIP stoppage ratio slows down to 63% in July, SIP inflow hits record high of Rs 28,464 crore
“We raise EBITDA by 3-11% and maintain BUY with unchanged PT of Rs400. Honasa remains a high-risk/high-reward play,” it said.The brokerage firm further said that the impact of unseasonal rains was visible from a modest 7% revenue growth (sunscreen impacted negatively), broadly in line with JEFe. Despite this, Honasa managed to see a sequential improvement in EBITDA margin, a beat.
The company reported a 7% increase year-on-year in operating revenue to Rs 595 crore for the quarter ended June, driven by growth in focus categories as well as optimised operations and scale across brands.
The net profit stood at Rs 41 crore, up slightly from Rs 40 crore a year ago. Sequentially, profit rose 65% from Rs 25 crore in the January-March period.
The company’s total expenses for the first quarter of 2025-26 increased to Rs 563 crore from Rs 520 crore a year earlier. A significant amount of the expenditure was attributed to the purchase of traded goods, which amounted to Rs 171 crore, employee benefit expenses (Rs 60 crore), and other expenses (Rs 318 crore), according to a report by ETTech.
“It is a volume-led growth. This growth could have been higher if the early onset of the monsoon had not taken place. There has been some impact on the largest category, which is sunscreen,” cofounder and CEO Varun Alagh said during a post-earnings analysts call on Tuesday.
The company reported earnings before interest, taxes, depreciation, and amortisation (Ebitda) at Rs 47 crore, with the Ebitda margin expanding 8%. “This is on account of gross margin expansion and increased salience of the offline channel, as well as the scale leverage we’ve seen. We continue to work on efficiency and effectiveness levers to ensure that our bottom line grows faster than our topline as we move forward,” he said.
For fiscal 2026, Alagh had earlier said that the company expects the full-year growth to bounce back to double-digits. In FY25, Honasa Consumer recorded revenue growth of 8%.
Also Read | Investors poured nearly Rs 12,000 crore into midcap and smallcap funds in July despite market weakness. Here’s why
Mamaearth is the biggest brand in Honasa Consumer’s portfolio, which also has brands such as The Derma Co, Aqualogica, Dr Sheth’s, Bblunt, and Staze Beauty. The younger brands are growing over 20% YoY, Alagh said.
“The growth was led by younger brands, which grew 20% YoY even while Mamaearth’s portfolio continued to see an improvement. Honasa’s focus categories (i.e., seven categories which contribute 80% to revenues) grew DD in 1Q, with DD growth in e-commerce and single-digit growth in other channels,” the Jefferies report said.