Honasa Consumer Shares Surge on Strong Q2 Results and Upgraded Target Price

Honasa Consumer Shares Surge on Strong Q2 Results and Upgraded Target Price

VoM News Desk | November 24, 2023 | 12:28 PM IST | Breaking News | Follow on Google News

Honasa Consumer Shares Surge on Strong Q2 Results and Upgraded Target Price

Honasa Consumer Shares Surge on Strong Q2 Results and Upgraded Target Price

Honasa Consumer, the parent company of popular brand Mamaearth, has seen a remarkable surge in its stock price following its strong September quarter results and a positive outlook from global brokerage Jefferies.

Record High Stock Performance

The company’s shares leaped by 14.5% in intra-day trading, reaching a new high of ₹484. This surge comes after a substantial 37% increase in just two sessions. Since its IPO launch at ₹330 on November 7, the stock has rallied over 49% from the issue price of ₹324 and jumped 89% from its 52-week low of ₹256.10 hit on November 10, 2023.

Impressive Financial Results

In the September quarter, Honasa Consumer’s net profit doubled to ₹30 crore, marking its first quarterly result post-listing. The firm’s revenue grew by 21% to ₹496 crore, outperforming the median growth of the FMCG industry which was 9%. The first half of FY24 saw a 33% revenue growth.

Optimistic Outlook from Jefferies

Jefferies reiterated its ‘buy’ recommendation on Honasa Consumer, raising the target price from ₹520 to ₹530, indicating a potential upside of almost 10%. The brokerage is confident in the company’s ability to maintain over 30% revenue growth and expects improving EBITDA margins in the coming years.

Key Financial Metrics

• Q2 EBITDA grew 53% year-on-year to ₹40 crore.
• Adjusted EBITDA (excluding one-offs) grew 35% YoY.
• EBITDA margin expanded by 170 basis points to 8.1%, the highest ever.

Company’s Growth Prospects

Honasa Consumer is regarded as an outlier among digital-first BPC brands in India, notable for its scale, profitability, and capital efficiency. Jefferies predicts the firm to deliver sector-leading revenue growth coupled with improving profitability.

Scenario-based Target Prices

• Base case scenario: Target price of ₹530 with a 28% revenue CAGR over FY23-26E and improving EBITDA margins.
• Bull case scenario: Target price of ₹680, assuming a stronger 33% revenue CAGR and sharper margin improvements.
• Bear case scenario: Target price of ₹250, considering a 20% revenue CAGR and modest margin improvements.

Potential Catalysts and Risks

Upside potential could arise from strong traction in the Mamaearth brand, faster scale-up of new brands, and better-than-expected margin expansion. However, downside risks include increased competitive intensity, execution challenges in offline expansion, or other market dynamics.

As the stock continues to perform well, investors and market watchers will closely monitor Honasa Consumer’s growth trajectory and its ability to sustain and build upon these positive trends.

VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.