Honasa Consumer Ltd, the parent company of Mamaearth, saw its shares climb 3.25% on the BSE to INR 431.70 during intra-day trading on May 24, up from the previous close of INR 418.10.
The company’s market capitalization surged to $1.68 billion (INR 13,979.79 crore) from the previous $1.58 billion recorded last Saturday (May 18).
Honasa’s significant surge in shares follows a day after the company announced improved financials for both the fourth quarter of the fiscal year 2023-24 (Q4 FY24) and the entire fiscal year.
FY24 marked the first full year of profitability for the listed beauty major, reporting a net profit of INR 110.5 crore, a significant turnaround from the INR 150.96 crore loss incurred in FY23. Similarly, the operating revenue for the entire fiscal surged by 30% to INR 1,919.6 crore in the year ended March 2024, up from FY23’s INR 1,492 crore.
Continue Exploring: Mamaearth parent Honasa Consumer achieves profitability for full fiscal year FY24
In the fourth quarter, its net profit increased by 17% sequentially to INR 30.47 crore, up from the previous quarter’s INR 25.9 crore.
The positive increase in Honasa’s profits was also mirrored in the sentiment of brokerage firms towards the startup. JM Financials upheld a ‘BUY’ rating for the stock and set a price target of INR 505, indicating a 17% upside from the stock’s current position.
Kotak Institutional Equities assigned Honasa an “Add” rating with a price target of INR 450, while Emkay set the shares’ price target at INR 500.
These brokerage firms anticipate that the company will leverage its house of brands strategy going forward.
Kotak emphasized that while the growth of its flagship brand Mamaearth slowed to 6-7% in FY24, the younger brands showed significant momentum, contributing positively to the overall performance.
Continue Exploring:Â Mamaearth parent Honasa Consumer sees 250% YoY surge in net profit to INR 26.1 Crore in Q3FY24
“Honasa is positioned to replicate Mamaearth’s success with some of its other brands, which should support overall revenue performance, facilitate cost savings across product lines, and drive profitability,” JM Financials remarked.
During the quarter, the company announced that Derma Co achieved an annual recurring revenue (ARR) of INR 500 Crore and is projected to reach an ARR of INR 1,000 Crore within the next 3-5 years.
Continue Exploring: Honasa Consumer’s skincare brand The Derma Co hits INR 500 Cr ARR milestone
The same level of growth is expected for Honasa Consumer Ltd’s other brands, Aqualogica and Dr. Sheth’s, with anticipated ARR of INR 500 Cr each, along with BBlunt, poised to achieve INR 250 Cr within the same timeframe.
It’s worth noting that ICICI Securities, which began covering Honasa during the quarter, foresees these brands achieving a compound annual growth rate of 45% from FY24 to FY26. In April, they also assigned a ‘BUY’ rating to the company and set a price target of INR 550.
Continue Exploring: ICICI Securities initiates coverage on Honasa Consumer with ‘BUY’ rating, anticipates 28% upside
