HDFC Securities Maintains Buy Rating on Honasa Consumer Amid Strong Growth

Domestic brokerage firm HDFC Securities has reaffirmed its bullish stance on Honasa Consumer, the parent company of the popular skincare brand Mamaearth, maintaining a buy rating with a target price of ₹550. According to the recent brokerage report, the company has continued to demonstrate strong growth across both Mamaearth and The Derma Co., with annual recurring revenue for each brand surpassing ₹10 billion despite operating in a highly competitive market.

The brokerage noted that Honasa Consumer is successfully scaling its core brands faster across offline channels by adopting a targeted distribution strategy that leverages both local chemists and traditional cosmetics retailers. Management has outlined an ambitious target to reach 300,000 direct-reach retail outlets by fiscal year 2031, a significant increase from its current footprint of approximately 120,000 outlets. Furthermore, the company has strengthened its presence in modern trade networks, achieving an estimated 95 percent penetration.

In addition to its flagship labels, Honasa has built a growing portfolio of emerging personal care brands, including Aqualogica, Dr. Sheth’s, BBlunt, and Reginald. These younger labels currently occupy the ₹1 to ₹2 billion revenue band and are positioned to expand further by utilizing the operational playbook established by Mamaearth and The Derma Co. HDFC Securities highlighted that Reginald holds strong potential to accelerate growth due to its focused positioning in male skincare and relatively limited market presence, while Staze is rapidly approaching ₹1 billion in revenue.

The brokerage update arrives alongside strong market momentum for Honasa Consumer, whose shares advanced 12 percent following a positive second-quarter business update. The company projected that the second quarter of fiscal year 2027 could deliver robust performance, with net sales value expected to grow year-on-year in the early thirties. This anticipated growth is supported by broad-based traction across its focus categories, with younger brands accelerating their year-on-year growth to around the mid-forties.

Management also emphasized ongoing progress toward improving profitability, forecasting an early double-digit operating margin for the second quarter of fiscal year 2027. While traditional fast-moving consumer goods companies consolidate around fewer, larger bets, Honasa continues to pursue emerging trends with a clear focus on product efficacy.

At the same time, broader financial developments involving related institutions have captured market attention. HDFC Bank shares recently experienced downward pressure amid broader market weaknesses, rising crude oil prices, and reminders regarding federal securities class action lawsuits. Law firms have issued investor reminders concerning deadlines to seek lead plaintiff status in lawsuits alleging that the bank misclassified payments to influence deposits, though the institution navigates these legal challenges alongside preparations for upcoming financial results and CEO succession processes.