Honasa Consumer, the parent company of the popular beauty and personal care brand Mamaearth, witnessed a remarkable 20 percent surge in its shares, reaching Rs 422.5 per share on November 23. This surge follows the company’s impressive Q2 financial results, which revealed a doubling of net profit to Rs 30 crore.
Jefferies, a leading financial services firm, responded positively to Honasa Consumer’s Q2 performance and reiterated a ‘buy’ rating on the stock. The brokerage firm has set a target of Rs 530 per share, indicating a substantial 25 percent upside from the current levels. In addition to the ‘buy’ rating, Jefferies has also upgraded its earnings per share (EPS) estimates on Honasa Consumer stock by 5-6 percent.
The report from Jefferies commended Honasa Consumer for a strong 2Q performance in terms of both topline and margin. Despite the growth deceleration in Q2, the management clarified that this was primarily due to the ERP changeover. The brokerage house expressed confidence in both growth and margins, signaling a positive outlook for the company. New brands within the Honasa portfolio, such as Dr. Sheth, have exhibited robust scaling, with Dr. Sheth becoming the fourth brand to surpass Rs 1.5 billion in Annual Recurring Revenue (ARR). Mamaearth’s H1 growth also demonstrated impressive day-to-day (D/D) figures.
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Honasa Consumer, the umbrella company for direct-to-consumer (D2C) brands such as Mamaearth, The Derma Co, and BBlunt, showcased a noteworthy turnaround from the year-ago period’s loss of Rs 15 crore. The Q1 of FY24 has reported a profit of Rs 24.7 crore.
Jefferies’ assessment of Honasa Consumer’s performance highlighted a growth deceleration from the fiscal first quarter. However, Jefferies has attributed this slowdown to an Enterprise Resource Planning (ERP) changeover. Jefferies emphasized that the genuine reflection of the company’s performance is evident in the remarkable H1 growth of over 35 percent.
Jefferies concluded by upgrading the EPS by 5-6% and reiterating a ‘Buy’ recommendation for Honasa Consumer’s stock, reflecting confidence in the company’s future growth trajectory and financial strength.
