Mamaearth’s parent company, Honasa Consumer, had an impressive second quarter with robust performance in both revenue and profit margins. The company’s stock experienced a remarkable 20% surge, reaching an unprecedented high of ₹423.75 per share today.
Mamaearth stock rally 20%
Jefferies, the global brokerage, has upped the target price for Honasa Consumer, the company behind Mamaearth, to ₹530 from the previous ₹520. This adjustment comes after the company posted robust results in the second quarter, with Jefferies predicting a significant 52% upside. Following the positive news, Honasa’s stock experienced a notable 20% surge, hitting an all-time high of ₹423.75 per share on Thursday. As of 10:04 am, the stock was trading nearly 20% higher on the NSE.
On Wednesday, the direct-to-consumer unicorn shared some great news about its performance in the second quarter. The company, known for its personal care products, not only saw a significant boost in revenue and profit margins but also doubled its bottom line, especially noteworthy given the lower starting point.
Honasa’s stock, which entered the market scene on November 7, reached its peak today. As of the current market assessment, the stock has surged by 28%, surpassing its initial issue price of ₹324. Investors are witnessing an impressive upward trend since its debut.
Over the last nine trading sessions, the share value of the personal care products company has surged by 27%, starting from ₹302.1 recorded on November 9 during intra-day trading on the NSE. This significant upturn is credited to Jefferies’ coverage of the stock, where they’ve given it a strong Buy recommendation and set a target of ₹520, instilling high confidence among investors.
After the earnings report, Jefferies noted that the positive results were mainly driven by improved profit margins, even though the revenue met expectations. When accounting for one-off items, the Ebitda margin saw a 70 basis points increase compared to the previous year.
According to the foreign brokerage, the company’s leadership conveyed confidence in achieving a revenue growth of over 30% in the future. Additionally, the management expressed optimism about ongoing improvements in EBITDA margins on a year-on-year basis.
Fueling this expansion are the latest additions to the Honasa Consumer family, and Dr. Sheth has recently joined the ranks of brands surpassing ₹150 crore in Annual Recurring Revenue (ARR). Mamaearth, in particular, has experienced substantial growth in the initial six months of the year.
Although there was a slowdown in growth compared to the first quarter, the management explained that this was due to the transition in Enterprise Resource Planning (ERP). The brokerage highlighted that the growth of over 35% in the first half truly captures the actual scenario, considering the impact of the ERP changeover.
Jefferies has given a boost to its estimates for Honasa Consumer’s EBITDA and EPS (earnings per share) for the fiscal years 2024 to 2026, increasing them by 5-6%. In a previous communication, Jefferies had anticipated a steady 27% annual growth for Honasa Consumer between fiscal years 2023 and 2026, highlighting enhanced profit margins. According to Jefferies, Honasa Consumer stands out with a significant advantage as a well-established internet-first brand, and despite maintaining a strong online presence, it’s noteworthy that about a third of its revenues now come from offline channels.
Honasa Consumer Q2 numbers
Honasa Consumer has reported an impressive 93% surge in net profit, reaching ₹29.4 crore for the quarter ending in September 2023, compared to ₹15.2 crore in the same period last year. The company’s revenue for the second quarter saw a robust 21% climb, reaching ₹496 crore, up from ₹410 crore in the corresponding quarter of the previous year. This stellar performance in both revenue and profit is attributed to a significant 27% year-on-year increase in volume, underscoring the company’s strong growth trajectory.
During the same timeframe, Mamaearth achieved an EBITDA of ₹40 crore, marking a significant 53% increase compared to the previous year. Varun Alagh, Chairman and CEO, highlighted the abundance of opportunities in the beauty market in India, noting that Mamaearth is capturing considerable consumer attention.
Alagh emphasized the accelerated growth of profits, surpassing revenue growth, with the first-half profit after tax soaring by an impressive 1,377% to ₹54 crore. Dr. Sheths has now joined the prestigious ₹150 crore Club, becoming the fourth brand from the Honasa portfolio to achieve this milestone, following Aqualogica and Derma Co. Alagh expressed the company’s commitment to delivering on promises to its business, consumers, and investors, ensuring continued success.
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