Honasa Consumer Shares Jump 11% Ahead Of Q2 Results; Analysts See Up To 57% Upside

Shares of newly-listed Honasa Consumer, which runs Mamaearth and other beauty and personal care brands, climbed nearly 11%

Shares of newly-listed Honasa Consumer, which runs Mamaearth and other beauty and personal care brands, climbed nearly 11 per cent in Monday’s trade ahead of the company’s September quarter results that are scheduled for Wednesday, November 22. The results would be followed by a Conference Call at 5 pm IST.

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In a filing to BSE on Friday, Honasa Consumer said a meeting of the board of directors of the company is scheduled to be held on Wednesday to consider, approve and take on record the unaudited standalone and consolidated financial results of the company for the quarter and half year ended September 30 along with limited review reports to be issued by the statutory auditor of the company.

Honasa Consumer said the trading window for dealing in the securities of the company that was closed for all designated persons from November 7, 2023, would continue to remain closed till completion of 48 hours after the financial results are uploaded online on the portal of the Stock Exchanges.

Honasa Consumer, founded by Varun and Ghazal Alagh, offers baby care, body care, face care, colour cosmetics, hair care and fragrances. It also owns a professional salon chain ‘BBlunt Salons’ that supplements its product portfolio.

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What Analysts Say?

“Given a lack of history and our understanding of seasonality, we forecast a 20% YoY growth in 2Q with slight QoQ margin improvement. We do note that ERP implementation in the base has boosted YoY growth in 1QFY24 and 1HFY24 revenue growth should still be c30%,” Jefferies analyst Vivek Maheshwari said.

Jefferies India’s initiation of coverage, giving the stock a high conviction buy rating and revising its target price to Rs 520 per share.

Jefferies predicts an impressive 57% growth for Honasa Consumer in the next three years. Despite acknowledging potential challenges such as tough competition, M&A, and slow brand expansion, the brokerage remains optimistic about the company’s prospects. It anticipates double-digit growth in the BPC (Beauty and Personal Care) segment, stable online sales, and foresees a positive trajectory for the company.

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Highlighting Honasa Consumer’s unique strengths, Jefferies notes the company’s emphasis on emerging trends, with 25-50 percent of annual revenue generated from new products. The millennial-focused approach, centered on content and community, sets the company apart.

Jefferies also points out that offline channels offer higher margins compared to online, with Honasa Consumer’s brands available in 150,000 general trade outlets and 31 merchandise trade chains.

However, despite positive market sentiment, Honasa Consumer reported a net loss of Rs 150.9 crore for the year ending March 2023. This loss was attributed to impairment loss on goodwill and other intangible assets, in contrast to the Rs 14.4 crore profit in the previous fiscal year.

DISCLAIMER:Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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