Honasa reported product business growth of 20.3% with underlying volume growth (UVG) of 25.2%.
Earnings before interest, taxes, depreciation and amortization (EBITDA) margin increased 201 basis points year-on-year to 8.3%, resulting in EBITDA of Rs 46 crore.
The operator of the Mamaearth brand attributed the strong performance to improved gross profit margins and scale-related efficiencies.
Should you buy, sell or hold Hosana Consumer shares? What analysts say:Jefferies
Jefferies maintained a buy rating on Honasa but lowered the target price to Rs 545 from Rs 590.
While first quarter performance exceeded forecasts, expectations for revenue growth were not met. Key concerns include strong competition and potential inventory corrections. Medium-term guidance calls for revenue growth of 20% and margin expansion of 150 basis points. Jefferies expects continued volatility as Honasa is still in the early stages of development.
Emkay
Emkay maintained a buy rating on Honasa Consumer with a target price of Rs 525.
Taking into account the corrective actions in offline retail to adjust inventory levels is likely to impact revenue by 150 basis points (according to management), which in turn will impact margin due to leverage and inventory build-up.
“We have reduced our FY25 revenue estimates by 4%; our FY26-27 estimates remain unchanged. We are also reducing our FY25E margin assumption by 120 basis points to 7.9%. Taking into account higher other income expectations, our profit cut for FY25 is 3%, while the profit increase for FY26E and FY27E is 2% each,” it said.
JM Finance
“As part of the GT channel restructuring, management had earlier forecast a revenue hit of 50-100 bps per quarter over 2-3 quarters in FY2025. However, with better visibility due to supply chain improvement, the company now intends to absorb the entire hit in one quarter itself (we estimate revenue hit at Rs 40 crore and EBITDA hit at Rs 30-35 crore). Post correction, performance is expected to return to a normalized trajectory (over 20% revenue growth and 150 bps YoY margin expansion) in the subsequent quarters,” the brokerage said.
“From a long-term perspective, the story remains the same (Mamaearth offline expansion, faster ramp-up of newer brands and margin expansion as economies of scale kick in). However, in the short term, the stock is likely to remain under pressure – the impact of the GT restructuring and sales normalisation will be an important factor to monitor in our view,” it added.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not reflect the views of The Economic Times.)
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