Honasa Consumer jumps 10% on strong Q2 update

Limited (HONASA) surged 10.5% to ₹488.10 on the BSE on October 6 after guiding for Q2 FY27 net sales value (NSV) growth in the early thirties year-on-year. The stock is now close to its 52-week high of ₹509.90. The Mamaearth parent expects its largest brand to grow in the high teens. Its younger brands, including The Derma Co., Aqualogica and Dr. Sheth's, are expected to grow around the mid-forties. Management also expects an early double-digit EBITDA margin in Q2, with strong year-on-year gains. Trading volumes jumped over three-fold, with 3.63% of the company's equity changing hands. Brokerages turned more positive. Kotak Securities upgraded the stock to Buy from Add and raised its fair value to ₹580 from ₹455. It said Honasa has moved from a high-burn D2C company to a profitable, multi-brand FMCG platform. JM Financial has a Buy rating with a ₹560 target. The numbers need context. This is a guidance update, not reported results. JM Financial had estimated 27% sales growth, and attributes part of it to the Reginald acquisition, so organic growth is lower than the headline. Mamaearth, still the core brand, is growing at less than half the pace of the newer brands. Kotak's ₹580 value is based on 50 times Sep-2028 earnings, so the stock already carries a premium valuation. Investors should watch whether actual Q2 results match the early-thirties guidance, organic growth excluding acquisitions, EBITDA margin delivery and Mamaearth's growth trend. The key question is whether newer brands can keep driving growth fast enough to justify the premium valuation.