Honasa Consumer Shares Gain 54% in 6 Months, HDFC Securities Sets Rs 550 Target

HDFC Securities has maintained its "Buy" rating on Honasa Consumer, the parent company of Mamaearth, with a target price of Rs 550. The brokerage expects growth across Mamaearth, The Derma Co. and Honasa's newer brands to support the business.

Honasa Consumer shares rose 12% on Tuesday after the company's second quarter business update. The stock's six month return reached 54%, while its year to date gain stood at 63%.

The company expects Q2FY27 net sales value growth in the early thirties, supported by growth across its focus brands and categories. It also expects an early double digit operating margin during the quarter.

HDFC Securities keeps Rs 550 target price

HDFC Securities said Honasa Consumer is showing growth across its two largest brands, Mamaearth and The Derma Co. The brokerage said the annual recurring revenue of both brands has crossed Rs 10 billion.

The brokerage also pointed to faster growth through offline channels. Mamaearth and The Derma Co. are expanding their reach through chemists as well as cosmetics retailers, giving the company a wider physical distribution network.

Management has set a target of reaching 300,000 offline direct reach outlets by FY31, compared with around 120,000 outlets currently. Honasa has also strengthened its modern trade presence, which now has 95% penetration.

The development is relevant to the broader stock market theme around consumer companies expanding their distribution networks. WeloMoney has also tracked Honasa Consumer among stocks to watch, giving readers another view of the company's market position.

Honasa Consumer growth and brand details

Honasa Consumer has built a portfolio of established and younger personal care brands. Along with Mamaearth and The Derma Co., its brands include Aqualogica, Dr. Sheth's, BBlunt, Reginald and Staze.

The brokerage said Aqualogica, Dr. Sheth's, BBlunt and Reginald are each positioned in the Rs 1 billion to Rs 2 billion revenue range. HDFC Securities expects these brands to grow further across channels by using the distribution approach developed by Mamaearth and The Derma Co.

Reginald has drawn attention from the brokerage because of its focus on male skincare and its relatively limited market presence. HDFC Securities expects the brand to have scope to accelerate its growth.

Management has also reported encouraging traction for Staze, which is approaching Rs 1 billion in revenue.

The company is expanding across personal care categories while established FMCG companies are focusing on fewer, larger brands. Honasa's strategy remains centred on emerging consumer trends and product efficacy.

Important numbers for Honasa Consumer

The main figures from the brokerage view and the company's business update are:

Particulars	Details
HDFC Securities target price	Rs 550
Brokerage rating	Buy
Six month stock return	54%
Year to date stock gain	63%
Tuesday share price move	12%
Mamaearth and The Derma Co. ARR	Above Rs 10 billion each
Current offline direct reach	Around 120,000 outlets
FY31 offline outlet target	300,000 outlets
Modern trade penetration	95%
Staze revenue	Approaching Rs 1 billion

These figures show the main areas being tracked by the brokerage and management: brand growth, distribution expansion and operating margins.

Q2FY27 growth expectations

Honasa Consumer expects Q2FY27 to build on the momentum seen in the previous quarter. The company expects net sales value to grow in the early thirties year on year.

Mamaearth is expected to deliver high teens year on year growth during the quarter. The company has linked this expectation to stronger brand affinity and a wider offline footprint.

The younger brands are expected to grow faster. Honasa expects their year on year growth to accelerate to around the mid forties during the quarter.

The company is also working to improve EBITDA margins. It expects an early double digit operating margin in Q2FY27, supported by strong year on year gains.

Q2FY27 expectation	Company view
Net sales value growth	Early thirties year on year
Mamaearth growth	High teens year on year
Younger brand growth	Around mid forties year on year
Operating margin	Early double digit

Why offline expansion matters

Offline distribution is an important part of Honasa Consumer's current growth plan. The company currently reaches around 120,000 outlets directly and aims to take that figure to 300,000 by FY31.

The company is also using chemists alongside cosmetics retailers for its offline expansion. This gives Mamaearth and The Derma Co. access to retail points beyond traditional beauty focused stores.

The 95% modern trade penetration reported by management also shows that Honasa has built a broad presence in organised retail. The next stage of growth will depend on how the company scales its direct reach and newer brands.

The stock's recent move also puts attention on how investors are responding to the company's operating update. Similar brokerage driven stock stories, including recent Indian stock rating updates, show how target prices and earnings expectations can influence market attention.

What investors should watch

The next focus areas for Honasa Consumer include the pace of sales growth, performance of Mamaearth and The Derma Co., and the contribution from its younger brands.

Investors will also watch the company's progress in offline distribution and whether the planned increase from around 120,000 outlets to 300,000 outlets by FY31 translates into sustained brand growth.

Other factors to monitor include:

• Mamaearth's high teens growth expectation in Q2FY27
• Growth of younger brands towards the mid forties
• Progress in EBITDA margins
• Expansion of direct reach outlets
• Growth of Staze towards Rs 1 billion in revenue

HDFC Securities' Rs 550 target price remains the brokerage's view. It does not represent a recommendation from WeloMoney.

About Honasa Consumer

Honasa Consumer is the parent company of Mamaearth and The Derma Co. The company also owns brands including Aqualogica, Dr. Sheth's, BBlunt, Reginald and Staze.

Its current strategy involves building larger brands while scaling newer personal care businesses across offline and other distribution channels. The company expects stronger sales growth and an early double digit operating margin in Q2FY27.

The next business update will provide more information on whether these expectations are translating into reported performance, particularly across the company's established and newer brands.

Frequently asked questions

What is the HDFC Securities target price for Honasa Consumer?

HDFC Securities has maintained a "Buy" rating on Honasa Consumer with a target price of Rs 550. The brokerage highlighted growth across Mamaearth, The Derma Co. and newer brands.

How much have Honasa Consumer shares gained in six months?

Honasa Consumer shares had gained 54% over six months following a 12% rise on Tuesday after the company's second quarter business update. The stock's year to date gain stood at 63%.

What is Honasa Consumer expecting for Q2FY27 sales growth?

Honasa Consumer expects net sales value growth in the early thirties year on year during Q2FY27. The company expects growth across its focus brands and categories.

What is Mamaearth's expected Q2FY27 growth?

Mamaearth is expected to deliver high teens year on year growth in Q2FY27. Honasa Consumer linked the expected growth to stronger brand affinity and a wider offline footprint.

What is Honasa Consumer's offline outlet target?

Honasa Consumer aims to increase its offline direct reach from around 120,000 outlets currently to 300,000 outlets by FY31. The company is expanding through chemists and cosmetics retailers.

What operating margin does Honasa Consumer expect in Q2FY27?

Honasa Consumer expects an early double digit operating margin in Q2FY27. The company said this would be supported by strong year on year gains during the quarter.