The stock of Honasa Consumer Ltd, the parent company of popular beauty brand Mamaearth, witnessed a notable surge, climbing by 3.25% on the BSE to INR 431.70 during intra-day trading on May 24. This upward momentum follows the company’s recent financial report for the fourth quarter of fiscal year 2023-24 (Q4 FY24) and the entire fiscal, which marked Honasa’s first full year of profitability.
Financial Performance
Honasa reported a net profit of INR 110.5 crore for fiscal year FY24, a significant turnaround from the loss of INR 150.96 crore incurred in FY23. Operating revenue for the entire fiscal surged by 30% to INR 1,919.6 crore, reflecting robust growth momentum. In Q4 FY24, the net profit witnessed a sequential increase of 17% to INR 30.47 crore, underlining the company’s improving financial health.
Market Response and Analyst Sentiment
The substantial spike in Honasa’s shares was met with positive sentiment from brokerage firms. JM Financials maintained a ‘BUY’ rating for the stock with a price target (PT) of INR 505, projecting a 17% upside potential. Similarly, Kotak Institutional Equities and Emkay reiterated their optimistic outlook, assigning PTs of INR 450 and INR 500, respectively. These brokerages anticipate Honasa to leverage its house of brands strategy for sustained growth.
Brand Expansion and Growth Projections
Honasa’s diversified brand portfolio, including Mamaearth, Derma Co, Aqualogica, Dr. Sheth’s, and BBlunt, is positioned for robust growth. Derma Co achieved an annual recurring revenue (ARR) of INR 500 crore in the quarter and is poised to reach INR 1,000 crore within 3-5 years. Similarly, other brands are forecasted to achieve significant ARR milestones, driving overall revenue performance and profitability.
Analyst Recommendations
ICICI Securities, which initiated coverage on Honasa, projects a compound annual growth rate of 45% for its brands during FY24-FY26. The firm maintains a ‘BUY’ rating for Honasa with a PT of INR 550, reflecting confidence in the company’s growth trajectory and market potential.
Conclusion
Honasa’s impressive financial performance and strategic initiatives have garnered investor confidence, as reflected in the recent surge in share price. With a strong brand portfolio and favorable growth projections, Honasa is well-positioned to capitalize on emerging opportunities in the beauty and personal care segment.
