Honasa clocked its highest-ever profit during the March quarter, which led to a 780-bps improvement in EBITDA margins YoY while Revenue from operations in the fourth quarter increased 21% year-on-year (YoY) to Rs 471 crore.
Here’s what analysts have to say:
JM Financial
Revenue growth continues to track well and ahead of peers, despite a challenging operating environment and lower primary sales due to the ongoing transition process in the offline channel. “We expect steady growth in Mamaearth (core ranges continue to do well) aided by improving quality of distribution as well as considering the huge opportunity in offline channel. Further, the execution on TDC highlights that Honasa would be able to replicate Mamaearth’s success with some of its other brands which should aid overall revenue performance, enable it to extract savings across lines and drive profitability,” said JM Financial.JM Financial has maintained a ‘buy’ call on the stock with a target price of Rs 505.Kotak Institutional Equities
Honasa’s growth was largely driven by younger brands (especially TDC) as the ongoing GT restructuring exercise impacted primary sales of the flagship brand, Mamaearth. Overall, KIE believes that it has been a good operating print in the context of weakness in consumption and the ongoing structural initiatives on the offline distribution front. Management has also maintained guidance of 20+% growth and 150 bps margin expansion.
“We estimate 19%/44%/43% revenue/EBITDA/PAT CAGRs over FY2024-27E,” said a report by Kotak.
Kotak Equities has an ‘add’ rating on the stock with a target price of Rs 450.
Emkay Global
“We remain positive on Honasa, given its relatively better execution, and Mgmtprowess of defining consumer trends in the Indian beauty and personal care
space, where it continues to corner market share. Mgmt guidance of >20%revenue CAGR ahead is reassuring, whereas its near-term margin guidance of
150bps expansion in FY25 looks conservative,” said the domestic brokerage firm.
Antique
Honasa Consumer’s 4QFY24 revenue performance was in line with Antique’s expectations while profitability was marginally higher. In the brokerage’s view, the revenue performance was largely driven by scaling up of emerging brands (The Derma Co., Aqualogica, etc.) while Mamaearth’s growth (UVG growth of midteens) was impacted due to an increase in competitive intensity.
“We appreciate the initiative to revamp the distribution channel in top 50 cities, which may impact revenue over the short term while over the long term it should help in better growth and profitability,” said Dhiraj Mistry of Antique Stock Broking.
The brokerage firm has reiterated a ‘hold’ rating for the stock with a target price of Rs 400.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)