Honasa Consumer Shares Jump After Strong Q2: Is the Rally Sustainable for Investors?

Shares of Honasa Consumer—the parent company behind Mamaearth—surged as much as 9% on Thursday, propelled by a sharp improvement in quarterly performance. The stock briefly touched ₹308.5 on the BSE before cooling to around ₹294, still up over 4%. Despite the rally, Honasa continues to trade below its IPO price of ₹324, adding complexity to the investor decision-making process.

A Strong Q2 Turns Sentiment Around

The September quarter marked a significant turnaround for the company. Honasa reported revenue of ₹5,381 crore, up 16.5% year-on-year, with volumes rising at a similar 16.7% pace. Adjusted for Flipkart settlement accounting, like-for-like revenue jumped 22.5%, a sign of broad-based category strength.

Profitability improved sharply.

• Gross margin: 70.5% (up 172 bps)

• EBITDA margin: 8.9% (vs. –6.6% in Q2FY25)

• Net profit: ₹39.2 crore (vs. ₹18.6 crore loss last year)

Analysts credited improved margins to a premium product mix, operating leverage, tighter cost controls, and reduced advertising spends.

Core beauty and personal care categories—including face washes, sunscreens, moisturisers and haircare—made up over 75% of the company's revenue and continued to grow steadily. Mamaearth regained share in face cleansers, while The Derma Co. crossed a ₹750-crore annual revenue run rate, becoming India’s top sunscreen brand.

Innovation, New Brands and Offline Scale Boost Prospects

Honasa expanded its portfolio with the launch of Luminve, a prestige skincare brand, and a 25% stake acquisition in Fang, a premium oral-care startup. Younger brands such as Aqualogica and Dr Sheth’s continued to grow above 20%, with strong contributions from new anti-pollution sunscreens and high-end serums.

The company also strengthened its offline presence, widening retail coverage by over 35% YoY to nearly 2.5 lakh FMCG outlets—a critical step in building consistency beyond digital channels.

Analysts Split on Whether the Stock Is a Buy

Brokerages remain sharply divided:

Bullish Calls

• ICICI Securities (TP ₹400, Buy): Strong execution, improving margins, long-term opportunity.

• Jefferies (TP ₹450, Buy): Sees Honasa firmly back on a growth trajectory with aggressive offline expansion.

Cautious or Bearish Views

• Emkay Global (TP ₹250, Sell): Believes valuations remain stretched despite margin gains.

• HSBC (TP ₹264, Reduce): Calls Honasa a “low double-digit grower” trading at 35–40x earnings—pricing in much of the optimism.

Should Retail Investors Buy?

Honasa’s Q2 numbers show clear momentum—strong growth, better margins, powerful brands, innovation pipelines and growing offline reach. The challenge lies in valuation, with the stock priced richly relative to its expected earnings trajectory.

Long-term investors confident in the company’s ability to scale brands like Derma Co., expand margins, and deepen its offline footprint may find the stock compelling. Those concerned about high valuations may prefer waiting for a correction or more clarity on sustained profitability.

Honasa shares were trading near ₹299.6, up over 6% intraday, reflecting renewed confidence—but also raising the question of whether too much optimism is already priced in.