Honasa hits fresh high 3 days in row post Q2; Jefferies adds stock to India portfolio

Honasa Consumer, the parent company of Mamaearth, continued gaining streak for second straight session on Friday, hitting fresh record highs for the third trading day amid sustained buying. The stock has surged 37.20% in the past week amid robust growth in quarterly profit in July-September 2023.

In a fresh development, New York-based independent investment bank and financial services company Jefferies has added Honasa Consumer, and a few other companies including Eicher Motors, NTPC, HDFC bank and Coal India to its India portfolio. On the other hand, Jefferies has cut its positions in companies like Marico, Maruti Suzuki India, PowerGrid India and NBFC.

According to Jefferies, Honasa's 30% revenue growth in Q2 and expanding margins play well with India's India strategy. The stock opened a gap up at ₹450.05 today on the BSE against the previous session close of ₹422.50. The stock surged to an intra-day high of ₹487, up 13.2% against the previous session close. This also marks an all-time high for the stock, which made its debut on the stock exchanges on November 7, 2023. At the current share price of ₹462.10, the company's m-cap has risen to ₹14,867.92 crore.

Honasa had listed marginally above its issue price of ₹324 on November 7, 2023, but the stock has now rallied 45.09% since then. The shares had listed at ₹330, a premium of 1.85% over the issue price. The ₹1,701 crore IPO of Mamaearth, consisting of an offer for sale (OFS) of 4.12 crore shares and a fresh issue of shares worth ₹365 crore, had subscribed 7.5 times.

On Thursday, too, the Honasa Consumer shares saw strong buying as investors cheered the beauty and personal care (BPC) company’s Q2 results. The stock hit a 20% upper circuit limit after the company reported 93% growth in profit at ₹29.4 crore as compared to ₹15.2 crore profit during the same period last year.

This was the first quarterly result after the company, co-founded by the husband-wife duo of Varun and Ghazal Alagh, got listed on the bourses. The revenue surged 21% to ₹496 crore against ₹410 crore recorded in the same quarter last year, driven by strong volume.

According to Mamaearth CEO and chairman Varun Alagh, the company's business grew 33% YoY in H1 FY24, which is 3.8 times the median growth of FCMG companies in India. "Mamaearth, our largest brand has entered the Top 15 BPC brands in India...Our profits grew much faster than our revenues, with H1 PAT growing by 1,377% to ₹54 crore. Dr Sheths has become the 4’th brand from Honasa portfolio to enter the ₹150 crore Club after Aqualogica and Derma Co," says Alagh.

For the first half of fiscal 2024 (H1 FY24), the digital-first beauty and personal care company delivered ₹961 crore in revenue from operations, growing 33% YoY, driven by volume growth of 35% YoY. It achieved an EBITDA of ₹70 crore and PAT came out to be at ₹54 crore.

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