Image Source : BW Businessworld
Honasa Consumer Ltd, the parent company of popular personal care brand Mamaearth, has recently witnessed heightened investor interest following HSBC’s revision of its target price from ₹207 to ₹236. This upgrade reflects growing confidence in the company’s potential to navigate current market challenges and strengthen its financial performance in the coming quarters.
Key Highlights of HSBC’s Target Price Revision and Market Context:
HSBC’s revised target price of ₹236 represents an approximately 14% upside from previous estimates, signaling improved expectations for revenue growth and margin expansion driven by strategic initiatives at Honasa Consumer.
The brokerage acknowledges ongoing challenges in scaling Mamaearth, the flagship brand, but also notes the rapid growth of newer brands like The Derma Co. The critical focus remains on how effectively Honasa manages profitability while expanding product lines.
High advertising and promotion expenses continue to impact near-term margins, as Honasa invests heavily to sustain market presence and brand visibility in a competitive landscape.
HSBC’s updated outlook suggests the company may reach a high single-digit EBITDA margin by fiscal year 2027, which is delayed by a year compared to management guidance targeting fiscal year 2026.
The target price is based on a price-to-earnings multiple of 40 times, reflecting optimism about Mamaearth’s growth rebound and potential earnings contributions from emerging brands, balanced against cautious near-term profitability concerns.
Company Performance and Market Response:
Honasa Consumer reported a 7% year-on-year revenue increase to ₹595 crore in Q1 FY26, with net profit growing modestly by 2.7% to ₹41 crore.
EBITDA margin improved sequentially to 7.7%, aided by operational efficiencies despite some top-line impact from unseasonal rains affecting sunscreen product sales.
The company’s stock price has responded positively to these results, gaining over 10% in recent trading sessions, buoyed by upgrades from other brokers such as CLSA and Jefferies, which have set their respective targets higher, up to ₹400.
Promoter and institutional investor holdings remain strong, underpinning confidence in Honasa’s long-term strategic roadmap despite short-term volatility.
Sectoral and Strategic Considerations:
Honasa operates in the fast-growing personal care and FMCG segment, driven by increasing consumer preference for clean, natural, and sustainable products, where its brands have solid recognition.
Competition remains intense with both domestic and global players expanding offerings in skincare and wellness markets, necessitating continued innovation and marketing investments by Honasa.
The company’s focus on diversifying beyond Mamaearth through brands like The Derma Co and continued expansion into new categories positions it for revenue diversification and risk mitigation.
Analyst and Investor Outlook:
Analysts note that fiscal year 2026 will be a critical period for Honasa to demonstrate execution capabilities, margin recovery, and profitable scaling of its brand portfolio.
Investors are advised to monitor upcoming quarterly results, advertising spend trajectories, and competitive developments, which will provide clearer visibility on growth sustainability.
Despite current valuation pressures and margin challenges, the consensus among several brokerage houses remains cautious-optimistic, expecting a gradual improvement in performance backed by product innovation and market penetration.
In summary, HSBC’s raised target price for Honasa Consumer Ltd to ₹236 underscores a cautiously optimistic view of the company’s prospects amid a competitive yet expanding personal care market. While near-term margin pressures and strategic execution remain key watchpoints, the steady revenue growth and brand diversification initiatives provide a foundation for medium-term value creation. Investors should align their expectations with evolving company fundamentals and market dynamics in this rapidly developing sector.
Source: HSBC analyst reports (2025), Honasa Consumer Q1 FY26 financial results disclosures, Moneycontrol, Economic Times, CNBC-TV18
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