Honasa Consumer, which owns and operates Mamaearth, has given investors a stronger-than-expected start to FY27, but the bigger question now is whether its growth engine can keep firing without sacrificing margins.
Foreign brokerages Jefferies and Citi have both raised their price targets after the June-quarter performance, even as their ratings remain sharply divided.
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Jefferies raised its target to Rs 650 from Rs 565 while retaining its ‘Buy' rating, pointing to what it calls ‘beat after beat' momentum. Citi, meanwhile, increased its target to Rs 390 from Rs 320, but retained its ‘Sell' rating, saying the sustainability of the growth and pace of margin expansion remain key watchpoints.
The contrasting ratings come after Honasa delivered its highest-ever quarterly revenue and profit, with growth accelerating across its brand portfolio and profitability improving sharply.
Jefferies Sees Momentum Building
Jefferies said strong momentum continues, with Honasa delivering on both revenue and margins. It highlighted high-teens growth at Mamaearth, while other brands continued to grow at a rapid pace.
The brokerage sees offline expansion, gains in focus-category share and new bets in wellness and fragrance supporting management's growth and margin roadmap.
Jefferies' positive stance comes as Honasa continues to build what management describes as a "House of Brands", reducing dependence on any single franchise.
Citi Wants Proof Of Sustainability
Citi's target hike reflects the strong Q1 performance, but the brokerage remains cautious on what comes next.
It flagged sustainability of growth as a key monitorable amid intensifying competition. Citi also wants to track the pace of margin expansion, particularly as the company continues to reinvest behind newer categories.
Management has identified fragrances and nutraceuticals as future growth vectors, adding new opportunities but also creating execution and investment requirements.
Q1 Numbers Show Why The Debate Matters
Honasa reported its highest-ever quarterly revenue of Rs 785 crore, up 31.8% YoY, while EBITDA nearly doubled to Rs 110 crore, with a margin of 14.1%. Profit reached a record Rs 90 crore, translating into an 11.5% PAT margin.
Focus categories grew more than 35%, Mamaearth returned to high-teens growth and younger brands expanded more than 40%.
The Derma Co. crossed Rs 1,000 crore in NSV ARR, while BTM Ventures crossed Rs 150 crore ARR. General Trade and Modern Trade both grew 40%+, with offline reach crossing around 3 lakh FMCG outlets.
For investors, the next test is clear i.e. whether Honasa can turn this sharp acceleration into a durable growth-and-margin story.
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