Mamaearth Shares Soar 20% on Robust Q2 Results; Jefferies Raises Target

Mamaearth Shares Soar 20% on Robust Q2 Results; Jefferies Raises Target

In a testament to its meteoric rise in the Indian beauty and personal care segment, Mamaearth, the flagship brand of Honasa Consumer Limited, saw its shares skyrocket by an impressive 20% on Thursday, November 23, 2023, hitting a fresh high of ₹422.50 apiece on the BSE. This surge in stock value followed the company’s announcement of robust financial results for the second quarter of FY24, with net profit doubling to ₹30 crore from the same period last year.

Honasa Consumer, the parent company of digital skincare brand Mamaearth, achieved a remarkable milestone in Q2FY24, doubling its net profit to ₹30 crore compared to the same period last year. This impressive feat was accompanied by a 21% growth in revenue from operations, reaching a total of ₹496 crore.

The company’s revenue from operations also witnessed a significant growth of 21% to ₹496 crore, further solidifying its position as a frontrunner in the industry. Mamaearth’s stellar performance has garnered positive attention from brokerage firm Jefferies, which has upgraded its earnings per share (EPS) estimates on Honasa Consumer stock by 5-6%. Jefferies has also reiterated its ‘buy’ rating on the stock and raised its target price to ₹530 per share, implying an upside of 25% from current levels.

Who is Honasa Consumer Limited?

Honasa Consumer Limited is a digital-first house of brands that caters to the diverse needs of millennial customers. Founded in 2016 by Ghazal Alagh and Varun Alagh, the company has established itself as a leading player in the Indian beauty and personal care industry, with its flagship brand Mamaearth being one of the most recognized and trusted names in the market.

Honasa Consumer’s success is driven by its focus on innovation, sustainability, and direct-to-consumer (D2C) marketing strategies. The company is committed to creating natural, toxin-free products that address the specific concerns of millennial consumers. It also utilizes advanced digital marketing techniques to reach its target audience effectively.

“Honasa has consistently delivered market-leading growth while simultaneously enhancing the profitability of our business,” remarked Varun Alagh, Chairman and CEO. “Our achievements in H1FY24, with a 33% year-over-year growth rate, stand as a testament to our commitment to innovation and customer satisfaction. This growth is nearly four times the median growth rate of FMCG companies in India.”

Honasa Consumer maintained its operational efficiency throughout H1FY24, operating at an impressive negative working capital of minus 5 days. Additionally, the company expanded its offline presence by 47% year-over-year, reaching 1,65,937 outlets. This expansion further solidifies Honasa Consumer’s position as a leading player in the Indian beauty and personal care market.

Honasa Consumer’s portfolio of brands includes:

• Mamaearth: A leading digital-first brand known for its natural and toxin-free personal care products.

• The Derma Co: A science-backed skincare brand that offers dermatologist-recommended products.

• Aqualogica: A hair care brand that focuses on providing solutions for dry, damaged, and frizzy hair.

• Ayuga: A modern take on Ayurveda, offering products that combine traditional Indian wisdom with modern science.

• BBLUNT: A professional hair styling and care brand.

• Dr. Sheth’s: A skincare brand that offers clinically tested products formulated by Dr. Sheth, a renowned dermatologist.

With its strong portfolio of brands, innovative products, and effective marketing strategies, Honasa Consumer is well-positioned to continue its growth trajectory and become one of the most prominent players in the Indian beauty and personal care industry.

Key Highlights of Mamaearth’s Q2 Results

• Net profit doubles to ₹30 crore, up from ₹15 crore in Q2 FY23
• Revenue from operations grows 21% to ₹496 crore, compared to ₹410 crore in Q2 FY23
• Direct-to-consumer (D2C) revenue continues to drive growth, with a 33% surge in the first half of FY24
• New brands are scaling up well, with Dr. Sheth now the fourth brand to cross ₹1.5 billion ARR
• Management remains confident in both growth and margins

Jefferies’ Positive Outlook on Mamaearth

Jefferies has expressed a bullish outlook on Mamaearth, citing its strong brand recognition, robust product portfolio, and effective marketing strategies as key drivers of growth. The firm is particularly impressed with Mamaearth’s ability to consistently deliver market-beating growth and improve profitability.

Mamaearth’s impressive Q2 results and the positive outlook from Jefferies are clear indicators of the company’s strong fundamentals and its potential for continued growth in the Indian beauty and personal care market. With its innovative products, targeted marketing campaigns, and focus on sustainability, Mamaearth is well-positioned to maintain its upward trajectory and solidify its position as a leading player in the industry.

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