Following the coverage initiation, shares of Mamaearth also jumped 5% to Rs 472 on BSE.
In its report, Goldman Sachs highlighted that the transformation of India’s beauty industry presents a multi-year growth opportunity. The combined revenue of five leading new beauty companies, including Honasa and Minimalist, grew exponentially, increasing 28 times between FY19 and FY23.
The brokerage sees two major drivers that could propel 2.5x revenue growth and a doubling of EBITDA margins from FY24 to FY30. Additionally, Goldman expects the scaling up of the portfolio of brands under the derma skincare segment to contribute to this growth.
Goldman Sachs also noted the significant growth opportunity as Honasa plans to double its offline distribution to 400,000 retail outlets by FY27.Honasa boasts the highest gross margins in FMCG coverage at 70%, however, it currently has the lowest EBITDA margins at 7%. The firm expects these margins to improve, projecting an increase from 7.1% in FY24 to 10.2% in FY27, and further to 14% by FY30. The brokerage firm also anticipates new brands within Honasa’s portfolio to scale up and turn profitable over this period.Also Read: Hindenburg blackmail plan falls apart, says Vijay Kedia
At 10:47 am, the scrip was trading 1.5% higher at Rs 458.3 on BSE. The stock has also surged just 8% year-to-date.
In Q1 FY25, Honasa reported a 63% year-on-year (YoY) increase in consolidated net profit, rising to Rs 40 crore from Rs 24 crore in the same quarter of the previous year. The company’s revenue from operations for the June quarter surged 19% YoY to Rs 554 crore, up from Rs 466 crore in the same period last year.
The earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded by 201 basis points YoY to 8.3%, resulting in an EBITDA of Rs 46 crore.
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