Domestic brokerage firm HDFC Securities, in its latest report, has maintained its ‘Buy’ rating on Honasa Consumer, the parent company of Mamaearth, with a target price of ₹550. The brokerage highlighted the company’s efforts to sustain strong growth across both Mamaearth and The Derma Co., with annual recurring revenue (ARR) for both brands now above ₹10 billion, despite operating in a competitive landscape.
Alongside these two established brands, Honasa has built a portfolio of emerging brands and expanded into newer personal care categories. The brokerage pointed out that Mamaearth and The Derma Co. are now scaling faster across offline channels, where the company has adopted a differentiated approach by leveraging chemists alongside cosmetics retailers.
For offline direct-reach retail, management has set a target of reaching 300,000 outlets by FY31, up from around 120,000 currently. It also said that the company has also materially strengthened its presence in modern trade over the past few years and now has 95% penetration.
In addition, the younger brands Aqualogica, Dr. Sheth’s, BBlunt, and Reginald are well placed in the ₹1-2 billion revenue band, which the brokerage expects to scale further across channels by leveraging the playbook established by Mamaearth and The Derma Co.
HDFC Securities believes Reginald has strong potential to accelerate growth, supported by its focused positioning in male skincare and relatively limited market presence. Management also highlighted encouraging traction for Staze, which is approaching ₹1 billion in revenue.
While traditional FMCG players are consolidating around fewer, larger bets, Honasa continues to leverage emerging trends with a clear focus on efficacy. Stock surges 54% in six months On Tuesday, shares of the company advanced 12% following its second-quarter business update, taking the stock’s six-month return to 54% and its year-to-date gains to 63%.
The company said Q2FY27 could be another robust quarter, building on the momentum established in the previous quarter. It expects year-on-year (YoY) growth in net sales value in the early thirties, supported by broad-based traction across its focus categories and brands.
Mamaearth has sustained its growth momentum over the past few quarters and is expected to deliver high-teens YoY growth during the quarter, supported by rising brand affinity and a widening offline footprint. The company also expects its younger brands to continue scaling on the back of strong traction, with their YoY growth expected to accelerate to around the mid-forties.
The company said it continues to make progress towards its goal of improving EBITDA margins. It expects the business to deliver an early double-digit operating margin in Q2FY27 as well, supported by strong YoY gains during the quarter. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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