The Honasa Consumer share price jumped nearly 7% in early trade after a steady Q2. Encouraging commentary from a host of brokerage also added to the positive sentiment for the Mamaearth parent company. Jefferies reiterated its Buy rating and assigned a target price of Rs 450 per share. The brokerage said the second quarter confirmed that the company has moved past its consolidation stretch, with a margin surprise and a stabilising growth profile supporting as much as 58% upside from current levels.
Jefferies added that the Rs 450 price target is set on a 12-month investment horizon, in line with its standard framework for equity recommendations. The immediate trigger, according to the brokerage, is a quarter where both operating performance and brand momentum outperformed expectations. According to Jefferies, the underlying drivers of volume growth, controlled spending, and offline traction now look durable.
Here is a detailed analysis of Jefferies’ investment rationale for Honasa
Jefferies on Honasa: Margin surprise in Q2
Honasa’s consolidated revenue rose to Rs 538.1 crore from Rs 461.8 crore a year earlier. But the brokerage noted that Flipkart’s change in settlement policy, which nets logistics and fulfilment charges against revenue, lowered the reported number by Rs 28 crore. Without this adjustment, underlying revenue growth was closer to 22.5%, rather than 17%, driven largely by volume gains.
Margins saw notable improvement as well. Gross margin increased to 70.5% from 68.8% a year ago. Advertising and promotion expenses eased to Rs 180 crore from Rs 183 crore, even as sales expanded. That shift helped EBITDA rise to Rs 47.6 crore, pushing the EBITDA margin to 8.9% the highest in several quarters, the report added.
Jefferies called the quarter a clear margin surprise, especially since Honasa simultaneously expanded gross margin and lowered ad intensity, something the market had been waiting to see.
Jefferies on Honasa: Mamaearth’s return to growth shifts sentiment
The performance of Mamaearth is a major factor driving Jefferies’ recommendation. After several quarters of decline, the flagship brand returned to positive growth. The management expects mid-single-digit improvement in the current quarter, with the pace rising to high-single-digit or even double-digit growth in subsequent quarters.
Younger brands such as Aqualogica, Ayuga, and Dr Sheth’s grew over 20% year-on-year. Combined, Honasa’s seven focus categories, which contribute roughly 75% of the portfolio, posted double-digit expansion. Management now aims to increase that contribution to more than 85% in the medium term, the report added.
Jefferies interpreted these trends as signs of regained category discipline after a stretch marked by heavy experimentation and uneven marketing efficiency.
Jefferies on Honasa: Offline expansion builds a new revenue base
The brokerage house highlighted Honasa’s offline expansion. The company has crossed 2.5 lakh retail outlets, marking over 20% growth in a year. More importantly, direct distribution now accounts for roughly 80% of the offline footprint, compared with about one-third in 2024.
Direct distribution offers greater control over inventory, shelf visibility and pricing. Jefferies noted that quick commerce now contributes nearly 10% of revenue and continues to be the fastest-growing channel, with stronger unit economics than marketplaces.
In Jefferies’ view, the combined effect of offline depth and quick-commerce acceleration is that Honasa is gradually reducing its dependence on costly digital customer acquisition, improving the predictability of the business.
Jefferies on Honasa: New launches add premium layers
The brokerage noted Honasa’s innovation pipeline. The company launched Lumineve, a prestige night-care skincare brand, in an exclusive partnership with Nykaa. With prices more than three times higher than Honasa’s mainstream products, Lumineve marks a deliberate push into premiumisation.
Honasa also plans a Rs 10 crore investment for a 25% stake in Fang, a teeth-whitening and oral-wellness brand valued at 13x FY25 sales. Meanwhile, The Derma Co. has reached an annualised revenue run-rate of Rs 750 crore, with an offline run-rate of Rs 100 crore already in place. Jefferies notes that The Derma Co. is expanding into moisturiser and hair-care categories while strengthening its position as what management claims is the “No. 1 sunscreen brand in CY24.”
Jefferies on Honasa: Risks that could temper trajectory
Jefferies flagged competitive intensity in the beauty and personal care market as a key risk. Execution challenges may arise in offline expansion, especially as the footprint widens. Any slowdown in premium skincare could weigh on The Derma Co.’s momentum. And policy changes by large platforms, such as Flipkart’s settlement adjustment, can distort short-term revenue even if underlying volumes remain intact.
Still, Jefferies believed Honasa has improved its discipline sufficiently to navigate most of these risks.
Financial structure: stability beneath the growth cycle
The brokerage highlighted that Honasa’s longer-term numbers show the trend. Revenues climbed to Rs 2,066.9 crore in FY25 from Rs 1,919.9 crore in FY24. Gross margins have held near 70%, forming a consistent base even as the company expands across channels and price tiers.
After EBITDA margins slipped to 3.3% in FY25, Jefferies expects a recovery to 8.0% in FY26, 8.5% in FY27, and 9.1% in FY28. Ad intensity, once at 41.5% in FY22, is projected to taper to around 33% by FY28.
To Jefferies, these shifts in margin recovery, better ad discipline, and improved cash conversion indicate that Honasa is shifting into a steadier FMCG-style operating profile.