Honasa Consumers Ltd.

About the Company:

Incorporated in 2016, Honasa Consumer Limited (HCL) provides beauty and personal care products through its digital platform. The Company is the largest digital-first BPC company in India in terms of revenue from operations. It has built a `House of Brands' architecture with a portfolio of six brands in the BPC space. Presently, the Company is trading in a variety of beauty and personal care products and services like baby care, skin care, hair and other personal care categories, which are manufactured under the brand names including 'Mamaearth', 'The Derma Co', 'BBlunt', 'Aqualogica', 'Ayuga' and 'Dr.Sheth's' and services comprises of beauty salon and hair styling services as well as content development and influencer marketing. Mamaearth ranks as the third-largest skincare brand in India.

Company’s Product Portfolio includes various products from various categories such as:

1. Skin Care: Face washes, serums (e.g., Mamaearth Ubtan Face Wash, The Derma Co. Kojic Acid Serum), and sunscreens focused on natural and active ingredients.

2. Hair Care: Shampoos, conditioners, and oils for nourishment and scalp health.

3. Body Care: Body washes, lotions, and moisturizers designed for hydration and nourishment.

4. Baby & Kids Care: Toxin-free products like shampoos, lotions, and creams under Mamaearth for gentle baby care.

5. Oral Care: Safe, natural toothpaste for children and adults.

6. Color Cosmetics: Makeup products with a focus on safety and natural ingredients.

Brand Portfolio:

• Mamaearth company’s flagship brand launched in 2016, is a brand for hair, skin, body, and baby care, as well as color cosmetics. Mamaearth is Asia’s 1st brand with MadeSafe certified products. All products are extremely safe and contain no toxins or harmful chemicals.
• The Derma Co. launched in 2020, helps consumers live a filter-free life with skin that you will fall in love with! Whether it’s acne, pigmentation, open pores, acne marks, or scars, The Derma Co. offers safe and hardworking products crafted with potent active ingredients. The Derma Co. ensures transparency and authenticity by mentioning the exact percentage of active ingredients in the products.
• BBlunts acquired by the company in 2022, offers consumers a salon-like experience at home through its wide range of products. Comopany aims to bring the latest innovations and trends in hair care and hair styling to the market.
• Dr. Sheth’s, acquired by the company in 2022 is developed by three generations of skin specialists, combines potent active ingredients backed by science with the goodness of nourishing botanical ingredients such as kesar, neem & haldi. The brand is focused on curating products that are specifically designed for the Indian skin types and seek to treat a range of common skin issues faced by Indian consumers.
• Aqualogica launched in 2021 by the company was born out of a love for skin that glows, feels plump, and looks dewy. The products are specially crafted for Indian climate & skin types. Company’s Unique Water Lock Technology™ and powerful blend of natural fruits & actives lock in moisture to give intense hydration.
• Staze 9to9, Powered by C-Lock TechnologyTM, offers long-wearing, studio-finish makeup designed and curated especially for Indian skin tones. Co-created by 43 beauty experts around the world, Staze 9to9 combines long-stay formulations with unique product formats to deliver high-performance color-cosmetics that won’t smudge or budge.
• Lumineve, recently launched brand by Honasa Consumers, in exclusive partnership with Nykaa, is a prestige night-focused skin care brand rooted in global dermatologist expertise, powered by exclusive ingredient technologies. Lumineve caters to the prestige skin care segment which is expected to be $4Bn market by 2035.
• Fang, company’s latest investment of Rs. 10cr. for significant minority in oral care brand is a prestige oral care brand focused on teeth whitening and everyday oral wellness. It is ranked among the top 3 new-age players in the teeth-whitening segment.

Fundamentals:

Financial Results:

Honasa reported a healthy rise in operating revenue for Q2 FY26, reaching around ₹538 crore, reflecting double-digit year-on-year growth. This performance was driven by strong consumer demand, higher volumes, and a favourable product mix.

The company delivered a net profit of about ₹39 crore, compared to a loss in the same quarter last year. The improvement was supported by:

• EBITDA of approximately ₹48 crore,
• EBITDA margin near 8–9%, and
• A significant increase in pre-tax profit, which turned positive year-on-year.

Gross margins also remained strong, aided by premium offerings and efficient sourcing.

Honasa’s “focus categories” — primarily skincare, hair care, and premium personal care — contributed more than three-quarters of quarterly revenues, highlighting a sharper portfolio strategy. Key brand-level achievements included:

• Mamaearth returning to profitable growth, especially in face cleansers.
• The Derma Co. surpassing a ₹750-crore annual run-rate, driven by sunscreen and treatment-led skincare.

The quarter also saw continued investments in innovation and premiumization, including the launch of a prestige skincare line and an expansion into premium oral care through a strategic minority acquisition.

The company continued rolling out Project Neev, a distribution restructuring initiative aimed at strengthening direct distribution in key markets and reducing sales return levels. Early benefits were visible in operational efficiencies and reduced return provisions.

H1 FY26: Consistent Momentum Across the Business

For the first half of FY26, Honasa delivered consolidated revenues of over ₹1,150 crore, showing healthy growth compared to the previous year.

Key half-year financials included:

• Net profit of roughly ₹81 crore,
• EBITDA of about ₹93 crore, and
• Positive operating cash flow despite investment-driven spending.

Capital expenditure remained modest as the company continues to operate with an asset-light model and negative working capital structure.

Business Strategy and Market Outlook

Management remains focused on sustaining growth through a combination of:

• Innovation in high-demand skin and hair categories
• Portfolio premiumization, including prestige beauty
• Geographic expansion and strengthened distribution
• Digital-led consumer engagement

The company has indicated expectations of high single-digit to double-digit revenue growth in upcoming quarters, supported by operating leverage and disciplined spending. Margins are expected to remain stable or improve further as scale efficiencies continue.Top of Form

Brand-Wise Growth Deep Dive (Q2 FY26)

1. Mamaearth

Mamaearth has returned to growth this quarter. The company specifically highlights that the face-cleanser segment saw 123 basis points (bps) share gain (per NielsenIQ), indicating strong recovery in a core category. One of its focus SKUs is the Rice Face Wash, which is now projected to become a “hero SKU” with the ambition to reach a ₹100 crore+ Annual Run Rate (ARR). This signals that Honasa is concentrating on scaling specific products with strong consumer resonance. The revival is being driven across e-commerce, modern trade, and offline (general trade) channels. This multi-channel push helps Mamaearth reach a broad audience.

2. The Derma Co.

The Derma Co. has crossed a ₹750 crore ARR, according to the company, and is now recognized by Euromonitor as India’s No. 1 sunscreen brand (CY ’24). The Derma Co. is also pushing other high-margin / high-growth products. For example, it has enhanced its Vitamin C serum, aiming for deeper market penetration. This is one of the more profitable brands in Honasa’s stable because of its science-driven, premium-positioned offerings; such brands help lift the overall margin mix for the company.

3. Aqualogica

Aqualogica is highlighted for launching India’s first in vivo–tested anti-pollution sunscreen. This indicates that Honasa is leveraging R&D to differentiate its science-based brands rather than competing only on price. This brand, categorized under “younger brands,” is growing strongly — Honasa reports 20%+ YoY growth for its younger-brand segment in Q2. Aqualogica is a key constituent of this.

4. Dr. Sheth’s

Dr. Sheth’s, another science- / dermatologist-led brand, is part of the “younger brands” group which grew over 20% YoY in Q2. This suggests good consumer traction for its serums, clinical skincare, and possibly face-wash lines. Dr. Sheth’s plays into Honasa’s broader strategy of offering science-backed, premium-ish products that complement both natural (Mamaearth) and prestige (Luminéve) tiers.

5. Luminéve (Prestige Skincare)

Luminéve is focused on night skincare and deep repair, using advanced / global ingredient science. It’s priced higher than Honasa’s mass / mid-premium offerings — about 2.5× the average of its existing SKUs (per commentary). This brand reflects Honasa’s ambition to move into higher margin, premium segments and not remain limited to mass or mid-premium skincare.

6. Fang (Oral Beauty)

Honasa has taken a significant minority stake (~25%) in Fang, a prestige oral-care startup focused on teeth whitening and everyday oral wellness. Honasa sees “oral beauty” in India as a future high-growth premium segment, projecting it could evolve into a US$ 700 million opportunity. This is a clear bet on expanding beyond skin & hair into adjacent beauty categories.

Conclusion:

Honasa Consumers Ltd operates within one of the most promising segments of India’s beauty and personal-care (BPC) industry. The broader BPC market in India is projected to grow steadily over the coming decade, expanding from roughly US$ 28 billion in 2023 to more than US$ 46 billion by 2032. Within this, the natural, organic, and ingredient-transparent personal-care categories—where Honasa’s brands have established strong resonance—are expected to grow at an even faster pace, with double-digit CAGR forecasts for the organic segment through 2030.

These structural tailwinds are supported by rising disposable incomes, the rapid expansion of e-commerce, and increasing demand for clean-label, wellness-oriented products across Tier 1, Tier 2 and Tier 3 cities alike. The personal-care ingredients landscape is also evolving quickly, with growing adoption of natural, multifunctional, and high-performance actives—an area where Honasa’s product-development strategy is already aligned.

In this favourable market environment, Honasa’s digital-first model, strong brand equity, and ability to scale through both D2C and modern retail channels position it well to capture long-term value. While competitive pressures, marketing intensity, and valuation considerations remain important risks to monitor, the company’s alignment with high-growth sub-segments of the BPC industry enhances its long-term investment appeal.

Overall, Honasa Consumers Ltd presents a thoughtful opportunity for smart investors seeking growth exposure in India’s rapidly expanding natural personal-care market. With disciplined execution, continued innovation, and a clear focus on consumer-centric brands, Honasa is well placed to benefit from the multi-year expansion of the Indian BPC sector.

HET ZAVERI

info@smartinvestment.in

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