Honasa Consumer, the parent company of Mamaearth, witnessed a remarkable surge in its net profit, soaring sevenfold during the first 9 months. In Q3FY24, the Profit After Tax (PAT) experienced an impressive 264 percent year-on-year growth. Ramanpreet Sohi, the CFO of this beauty and personal care enterprise, underscored the significance of outpacing industry growth by 2 to 2.5 times in the upcoming year. The company aims to achieve an incremental operating margin of 100 to 150 basis points annually for the next two to three years, ensuring that bottom-line expansion surpasses top-line growth while maintaining operational efficiency.
“We intend to outgrow the industry by 2 to 2.5 times,” said Sohi discussing his growth plan for next year.
The company’s margin saw a 7.1 percent growth, marking a 397 basis point increase year-over-year. Sohi believes this growth reflects a structural trend.
Continue Exploring: Mamaearth parent Honasa Consumer sees 250% YoY surge in net profit to INR 26.1 Crore in Q3FY24
“As we scale younger brands efficiently, we are also scaling up. We intend to unlock 100- 150 bsp incremental operating margins year on year for the next two to three years. That will continue to unfold and ensure our bottom line growth and possibly topline growth,” he said.
Although the Q3 results were within expectations and Honasa demonstrated a robust performance, the finance chief emphasized challenges in the short to medium term, such as concerns regarding softening demand.
He said, “The rural stress is now seeming to play out in urban markets as well.”
According to him, the Q3 festive season didn’t go as well as expected for e-commerce platforms, and the industry experienced a mild winter. This is placing pressure on larger incumbents and new-age companies in terms of volume growth.
Continue Exploring: Mamaearth parent Honasa Consumer’s shares rally 10% on strong Q3 earnings
Honasa Consumer’s growth is driven by strategic focus on expanding distribution channels, with a notable 37 percent year-on-year increase, reaching 1.7 lakh retail touchpoints. This expansion particularly emphasizes offline distribution for Mamaearth products. Additionally, The Derma Co has achieved a noteworthy milestone by attaining EBITDA positive status year-to-date, propelled by popular products like serums, sunscreens, and face wash.
“Younger brands have scaled up while some leading the market in categories like sunscreen have exhibited strong market share growth,” said Sohi.
The company’s primary focus for Q4FY24 and the upcoming financial year is to enhance distribution networks. This involves recruiting suitable partners, refining distribution processes, and integrating a distribution management system. Additionally, the company remains committed to making strategic investments in their brands to solidify their market presence by the following year, as stated by Sohi.
Continue Exploring: Nuvama analysts bullish on Mamaearth for MSCI Smallcap Index, Nykaa gaining momentum for Global Standard Index
