Jefferies turns white knight for Mamaearth, screams buy with Rs 520 target
Honasa Consumer, which runs Mamaearth and other brands, today fell up to 15% but recovered after global brokerage firm Jefferies issued a report initiating coverage on the beauty and personal care products company.
After falling 15% to the day's low at Rs 256.10 in the morning session, Mamaearth shares rallied up to around 4% to Rs 313.50 at noon.
«Honasa should report industry-leading growth at 27% over the next 3 years. We value at 6x Sep-25 EV/sales (at a discount to HPC peers; implies 67x FY26 PE) to arrive at a price target of Rs 520,» Jefferies said, while calling it a high conviction buy.
Led by founder-couple Varun and Ghazal Alagh, Honasa has prioritised growth over profitability, which Jefferies said is the correct strategy.
«BPC is likely to grow in double digits, with steady gains expected for online channels. Honasa has a strong online presence in high-growth spaces within BPC, like skincare, hair care, cosmetics, etc, and at masstige/premium price points,» Jefferies said.
Honasa has managed to create a house of brand architecture with six brands portfolio, with the salience of Mamaearth down to 65% and revenues of Rs 12 billion in FY23, which puts it in the league of top BPC brands in India.
In Q1 the company reported an EBITDA margin of 6%, which Jefferies expects to grow into double-digits by FY26 led by optimisation in marketing spends and scale benefits.
The company had posted a loss of Rs 151 crore in FY23 against a profit of Rs 14.4 crore a year earlier.
The Delhi-based startup reported a 58% jump in its revenues to Rs 1,493 crore in the same period.
In the recent June quarter, its revenue from operations rose 49% year-on-year (YoY) to Rs 464 crore. Net profit was at Rs 9.24 crore against a
