Mamaearth-Parent Honasa's Record Q4 Wins Price Target Hikes — But Is It Sustainable?

Honasa Consumer delivered a strong Q4 performance driven by improving margins, accelerating growth and expanding offline distribution, prompting brokerages to raise target prices while remaining divided on the sustainability of the momentum. The parent company of Mamaearth reported a 23.1% year-on-year rise in revenue to Rs 657.1 crore, while EBITDA nearly tripled to Rs 77.2 crore from Rs 27 crore a year ago. EBITDA margin expanded sharply to 11.7% from 5.1%, marking the company's highest-ever quarterly margin level. Net profit also rose to Rs 69.2 crore from Rs 24.9 crore last year.

Jefferies maintained its Buy rating and raised its target price to Rs 565 from Rs 500, saying Honasa is “firmly on a strong growth path.” The brokerage highlighted improving execution, stronger profitability and management guidance of high-teen revenue growth alongside 100 basis points of annual EBITDA margin expansion.

Citigroup, however, retained its Sell rating despite increasing its target price to Rs 320 from Rs 285. Citi acknowledged the company's growth acceleration and operating leverage benefits but said sustainability remains the key monitorable.

Honasa said its focus categories grew more than 35% during the quarter, while Mamaearth posted double-digit growth and further strengthened its offline presence.

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Jefferies on Honasa

• Jefferies maintains a Buy rating on Honasa and has raised its target price to Rs 565 from Rs 500.
• The brokerage believes Honasa is firmly on a strong growth trajectory.
• Performance improved further in Q4, while EBITDA margins reached their highest-ever levels.
• Management has guided for high-teens revenue growth along with annual EBITDA margin expansion of around 100 basis points.

Citi on Honasa

• Citi maintains a Sell rating on Honasa and has raised its target price to Rs 320 from Rs 285.
• The brokerage acknowledged improving growth momentum and operating leverage, but said sustainability remains the key monitorable.
• Citi believes expanding offline distribution and continued product innovation will be critical to sustaining growth.
• It also flagged the pace of margin expansion as an area to watch, particularly given the need for continued reinvestment in the business.

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