Feb'25 View on Honasa Consumer Ltd

Honasa Consumer Limited (HCL) provides beauty and personal care products through its digital platform. After falling from 540 levels the stock has made a low of 200 and is now lying at 220 and could very well rise above 250 level basis following positive factors. • Honasa’s revenues grew 6% yoy to Rs517.5 cr (in line). • EBITDA margin declined 200 bps yoy to 5% (KIE: 4.1%). • ME stabilization and growth revival could take at least 2-3 quarter. • Efforts underway to redefine the playbook & revive growth in next 2-3 quarters. • Honasa reported 6% yoy revenue growth,led by about 40% growth in younger brands. • Management indicated that efforts are underway to stabilize Mamaearth (ME) sales. • Stock is currently trading at 49.4x P/E FY27E earnings. • We expect EPS to grow by 89.5% in FY26E & by 49.4% in FY27E. • We value Honasa using Discounted Cash Flow (DCF) Methodology.