Honasa Consumer, the company overseeing the renowned beauty and personal care brand Mamaearth, recently witnessed a staggering 20 percent surge in its shares, soaring to an impressive Rs 422.5 per share on November 23. This surge in stock value closely trailed the unveiling of the company’s extraordinary Q2 financial results, unveiling a remarkable twofold increase in their net profit, soaring to Rs 30 crore.
Jefferies, a leading name in the financial services sector, has shown strong confidence in Honasa Consumer’s Q2 performance by reaffirming a ‘buy’ rating on the stock. Impressively, the brokerage firm has set an ambitious target price of Rs 530 per share, signifying a substantial 25 percent potential upside from the present levels. Furthermore, Jefferies has revised upward its estimates for Honasa Consumer’s earnings per share (EPS) by 5-6 percent, reflecting heightened optimism regarding the company’s financial prospects.
The Jefferies report praised Honasa Consumer for its strong second-quarter performance in terms of revenue and margins. Although there was a slowdown in growth during Q2, the management clarified that this was primarily a result of an ERP changeover. Despite this temporary deceleration, the brokerage firm remains optimistic about the company’s growth prospects and margins, indicating a positive outlook. In the second quarter of this fiscal year, Honasa Consumer a revenue growth of 20.85% to reach Rs 496.10 crore. This demonstrated a substantial increase from the previous year’s corresponding period, which stood at Rs 410.49 crore. Concurrently, the total expenses for the September quarter amounted to Rs 463.98 crore, indicating an 18.25% uptick from the expenses recorded during the same period last year.
Within the spectrum of Honasa’s portfolio, emerging brands like Dr. Sheth have exhibited significant growth, establishing Dr. Sheth as the fourth brand to surpass Rs 1.5 billion in Annual Recurring Revenue (ARR). Mamaearth, within the same period, showcased impressive day-to-day (D/D) growth figures throughout H1. Honasa Consumer also experienced a substantial turnaround from the loss of Rs 15 crore in the preceding year. Notably, the company reported a profit of Rs 24.7 crore in the first quarter of FY24.
