Mamaearth parent Honasa Consumer shares hit 20% upper circuit on Q2 earnings; Jefferies maintains Buy

Mamaearth share price, Mamaearth Q2 results: Shares of Honasa Consumer, the parent company of personal care brand Mamaearth, extended their early gains in the late morning deals on Thursday (November 23) and hit their 20 per cent upper circuit at Rs 422.5 apiece on the BSE. The previous day, the company's shares suffered losses of more than 4 per cent. On Wednesday, the company posted a good set of numbers for the September quarter.

Revenue at the Mamaearth-owned company jumped 21 per cent year-on-year (YoY) and came in at Rs 496 crore. EBITDA also surged 53 per cent YoY to Rs 40 crore, and PAT logged a massive 94 per cent YoY. Margins at the company also soared and stood at 8.1 per cent versus 6.4 per cent registered in the same period last year.

Honasa Consumer grew 3.8X compared to the FMCG market in H1 (Honasa Consumer growth: 33 per cent | FMCG companies median YoY growth: 9 per cent), noted the company's press release. The company has by-and-large logged volume-led sales growth, which has been 27 per cent during the quarter under review.

From the IPO issue price of Rs 324, the stock has registered just 9 per cent gains considering the closing price of the previous trade.

The company's debt to equity is 0.01, which is quite decent.

Brokerage firm Jefferies is bullish on the counter and has raised the target price from Rs 520 to Rs 530. As per the global brokerage, the beauty products company posted a strong Q2 on both the topline and margins. Further, it pointed out that the company saw a growth deceleration from Q1, which the management attributed to the ERP (enterprise resource planning) changeover. Hence, H1 growth of more than 35 per cent reflects the true picture, it added.

The brokerage is of the view that new brand offerings by the company are scaling up well. Dr Sheth now becomes the fourth brand to cross Rs 1,501 crore ARR or annual recurring rate. The company's H1 growth had also been in double digits. The brokerage upgraded the company's earnings per share (EPS) by 5–6 per cent. Furthermore, it notes that the company's management remains confident of delivering 30 per cent plus revenue growth going forward, with improvement in margins on a year-over-year (YoY) basis.

Honasa Consumer was incorporated on September 16, 2016. Mamaearth, the company's flagship brand, emerged as the topmost brand in the beauty and personal care segment. Within 6 years of launch, the company became the brand with an annual revenue of Rs 1000 crore. In the financial year 2023, the company was the biggest digital-first BPC company in terms of operational revenue.