Honasa Consumer sees broad-based brand growth and margin expansion after strong 2QFY27 beat

Investment View and Earnings Outlook

Emkay Research’s November 08, 2026 result update on Honasa Consumer retains a BUY recommendation following a strong 2QFY27 performance, which exceeded both Emkay’s and consensus expectations across revenue, EBITDA and adjusted PAT.

Emkay raised its FY27E to FY29E earnings estimates by 5 to 9 per cent, reflecting stronger-than-expected performance from Mamaearth and The Derma Co, alongside higher margin assumptions following several quarters of outperformance. The broker expects sales and earnings CAGR of 18 per cent and 27 per cent, respectively, over FY26 to FY29E.

Emkay increased its target price by 4.5 per cent to Rs 575, based on 50 times September 2028E EPS.

2QFY27 Financial Performance

Honasa Consumer reported 2QFY27 revenue of Rs 7,312 million, up 35.9 per cent YoY, driven by 31 per cent volume growth. Revenue was 8 per cent above Emkay’s estimate and 6 per cent above consensus. EBITDA nearly doubled YoY to Rs 922 million, up 93.5 per cent and 18 per cent above Emkay’s estimate. Adjusted PAT rose 84.2 per cent YoY to Rs 723 million and was 14 per cent above Emkay’s estimate.

EBITDA margin expanded 380 basis points YoY to 12.6 per cent, although it declined 200 basis points QoQ from the particularly strong 1QFY27 level. Gross margin declined only 60 basis points YoY to 69.9 per cent despite crude-linked packaging-cost inflation.

Broad-Based Brand and Category Growth

Growth was broad based. Focus categories, which account for more than 80 per cent of sales and have about 5 per cent share of an approximately Rs 50,000 crore market, grew more than 40 per cent.

• Mamaearth maintained high-teens growth, with about 80 per cent of growth coming from existing stores. The brand gained 140 basis points of share in face wash and 50 basis points in shampoo.
• Younger brands grew more than 45 per cent, or more than 40 per cent excluding The Derma Co.
• The Derma Co had an annualised revenue run rate of about Rs 10,000 million and distribution reach of 65,000 outlets.
• Aqualogica was gaining acceptance among Gen-Z consumers, while management was revisiting Dr Sheth’s positioning for actives consumers.
• BBlunt hair colour grew more than 100 per cent after its relaunch.

Channel Momentum and Margin Drivers

Channel metrics remained favourable, with growth across e-commerce, offline and modern trade. Outlet reach rose 26 per cent YoY to 3.2 lakh outlets.

• E-commerce grew more than 20 per cent.
• Offline same-store growth exceeded 30 per cent.
• Modern-trade offtake grew more than 40 per cent.
• Outlet reach increased to 3.2 lakh outlets.

Management attributed margin expansion to advertising and promotion and channel-mix efficiencies of 250 to 270 basis points, with the mix shifting towards offline and quick commerce. Operating leverage contributed a further 110 to 140 basis points. Advertising and promotion spending was broadly flat as a proportion of sales.

Management Outlook

Management expects EBITDA margin to remain around 12.5 per cent in 2HFY27 despite festive activations and reiterated its 15 per cent EBITDA-margin objective over the next four years. It noted that annual margin expansion could be only 50 to 70 basis points in years when it prioritises growth.

Management expects 3QFY27 revenue to be sequentially higher due to seasonality. Price increases have been taken to offset crude-led packaging inflation, which remains a cost pressure and a key factor that could affect gross margins.

Revised Estimates and Investment Thesis

The investment thesis relies on sustained volume-led growth across brands, execution in offline and online channels, and continued operating leverage.

Key Risks

• Pressure from packaging inflation could affect gross margins.
• Slower growth in key brands could weaken the investment thesis.
• Investment-led moderation in margin improvement could reduce earnings progression.