ICICI Securities Recommends Buying Honasa Consumer, Targets Price of Rs 550

Honasa Consumer to Focus on Sustainability and Long-term Growth at Upcoming Analyst Meet

Honasa Consumer, the parent company of Mamaearth and Derma Co, is set to host an analyst meet in the near future. According to ICICI Securities' research report, the meet is likely to focus less on near-term recovery and more on the sustainability of growth, profitability, and the long-term shape of the business.

Key Investor Expectations

Investors are expected to focus on several key areas during the meet. Firstly, they would like to see stronger visibility on the sustainability of Mamaearth's return to teenage growth, supported by focus category leadership and improving offline execution. Secondly, investors would like a clearer articulation of Derma Co's long-term profit pool, scalability of younger brands, and portfolio diversification benefits. Lastly, investors would seek improved disclosure around channel mix, A&P efficiency, operating leverage, and medium-term margin aspirations.

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Outlook and Earnings Estimates

ICICI Securities has increased its earnings estimates for FY27/28 by 2.3%/5.8% to reflect better revenue growth. The research firm models revenue, EBITDA, and PAT CAGRs of 21%, 27%, and 23% respectively over FY26-28E.

Recommendation

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ICICI Securities maintains a BUY rating on Honasa Consumer with a DCF-based revised target price of INR 550 (vs INR 500 previously).