Synopsis:
Brokerages turned upbeat on Honasa Consumer Ltd after its Q1 performance and margin guidance. CLSA upgraded the stock to ‘Outperform’ with a higher target price, while Jefferies and ICICI Securities maintained bullish stances. However, Emkay Global retained a ‘Sell’ rating, citing competitive pressures.
The beauty and personal care sector saw renewed investor interest on Tuesday after multiple brokerages revised their outlooks on a prominent player, driven by stronger-than-expected margins, healthy underlying volume growth, and upbeat guidance.
Honasa Consumer Ltd, with a market capitalisation of Rs. 9,381.55 crore, opened at Rs. 278.35 compared to the previous close of Rs. 268.10, and touched an intraday high of Rs. 304.80, marking a 13.73 percent rise from the prior close.
What’s the News?
CLSA upgraded Honasa Consumer to ‘Outperform’ from ‘Hold’ and raised its target price to Rs. 333 from Rs. 303, citing that focus categories are driving growth, while the impact from weaker summer sunscreen sales was partly offset by other segments.
The brokerage highlighted margin guidance of a 100–150 basis point annual margin improvement over the next four to five years, with risks skewed to the upside, particularly on margins.
It also raised FY26–28 earnings estimates by 15–26 percent to reflect the improved margin outlook. CLSA noted that Q1 revenue grew 7.4 percent year-on-year with underlying volume growth of 10.5 percent, though early monsoon rains impacted sunscreen sales by about 200 basis points.
Jefferies maintained a ‘Buy’ rating with a price target of Rs. 400, pointing to positive margin surprises despite revenue pressure from unseasonal rains. The brokerage noted that Honasa delivered sequential EBITDA margin improvement and exceeded expectations, although new brands continue to grow slowly and the flagship Mamaearth brand has yet to fully recover, remaining a core focus for growth.
ICICI Securities also maintained a ‘Buy’ rating with a target price of Rs. 400. The brokerage said that modern trade and e-commerce channels registered double-digit growth, while sequential performance in general trade improved due to management initiatives.
It expects profitability to rise with scale in younger brands, supported by new product development and sustained improvement in Mamaearth’s performance through route-to-market changes.
In contrast, Emkay Global Financial Services retained a ‘Sell’ rating with a target price of Rs. 250, noting that The Derma Co remains the fastest-growing brand but faces rising competition intensity ahead.
It stated that any re-rating hinges on the company’s growth trajectory, and while the 100–150 basis point margin improvement target is achievable, it depends on sustaining growth momentum.
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Q1 Results Snapshot
On a quarter-on-quarter basis, revenue rose 11.4 percent from Rs. 534 crore to Rs. 595 crore, while net profit surged 64 percent from Rs. 25 crore to Rs. 41 crore. Year-on-year, revenue increased 7.4 percent from Rs. 554 crore to Rs. 595 crore, and net profit grew 2.5 percent from Rs. 40 crore to Rs. 41 crore.
About the Company
Honasa Consumer Limited is India’s largest digital-first beauty and personal care company, with a diverse portfolio of six brands. Leveraging data-driven innovation and a robust omnichannel distribution network, it is uniquely positioned to capitalise on key market trends. The company emphasises sustainability and consumer focus in its growth strategy.
Written by – Manan Gangwar
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