I-Sec upgrades Honasa Consumer to Buy, target price Rs 400

ICICI Securities has upgraded Honasa Consumer to a buy with a target price of Rs 400. The current market price of Honasa Consumer Ltd. is Rs 219.05. Honasa Consumer, incorporated in 2016, is a Small Cap company with a market cap of Rs 7139.31 crore), operating in FMCG sector.

Honasa Consumer key products/revenue segments include Personal Care for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 536.72 crore, up 11.39% from last quarter Total Income of Rs 481.84 crore and up 7.52% from last year same quarter Total Income of Rs 499.18 crore. The company has reported net profit after tax of Rs 26.02 crore in the latest quarter.

The company?s top management includes Mr.Varun Alagh, Mr.Ghazal Alagh, Mr.Vivek Gambhir, Mr.Subramaniam Somasundaram, Ms.Namita Gupta, Mr.Ishaan Mittal. Company has S R Batliboi & Associates LLP as its auditors. As on 31-12-2024, the company has a total of 32 Crore shares outstanding.

Investment Rationale
ICICI Securities earnings estimates for Honasa Consumer are unchanged, modelling in revenue/ EBITDA/PAT CAGRs of 10/16/24 (%) over FY24?26E. They have upgraded it to BUY (from Add) with a DCF-based target price of Rs 400. At the target price, the stock will trade at 61x Sep?26E EPS and 5.2x EV/sales Sep?26E. Key risks: 1) heightened competition, 2) execution miss, 3) low success in scale-up of new brands and 3) continued slowdown in Mamaearth.

Promoter/FII Holdings
Promoters held 35.03 per cent stake in the company as of 31-Dec-2024, while FIIs owned 15.44 per cent, DIIs 18.45 per cent.