Honasa Consumer Ltd, the parent company of Mamaearth, reported a net profit of Rs 26 crore for the third quarter of FY25, nearly flat from the previous year. The firm's revenue from operations rose 6 percent year-on-year (Y-o-Y) to Rs 518 crore.
The company had slipped into the red last quarter after transitioning to a direct-to-consumer (D2C) distribution model as part of its Project 'Neev', which necessitated inventory corrections. It had posted a loss of Rs 18.5 crore in Q2 FY25.
Honasa’s gross profit margin in Q3 improved by 132 basis points to 70 percent, while EBITDA stood at Rs 26 crore, translating to an EBITDA margin of 5 percent for the quarter ended December 31, 2024.
“In Q3FY25, we remained committed to long-term growth, advancing the strategic implementation of Project Neev to strengthen our offline distribution through direct distributors in the top 50 cities,” said Varun Alagh, Chairman, CEO and co-founder, Honasa Consumer. “As we scale, our vision remains centered on driving disruptive innovation, deepening offline penetration, and delivering unique value propositions to consumers,” he added.
Under project Neev, the company had aimed to strengthen its offline go-to-market (GTM) strategy, as its flagship label, Mamaearth, has been growing slower than expectations.
As per the company, it successfully completed “the appointment of Tier-1 distributors in all the top 50 cities” during the December quarter.
While Mamaearth is the company’s largest brand, it also runs The Derma Co, BBlunt, Dr Sheth’s, Aqualogica, and Staze 9to9. These emerging brands reported over 30 percent Y-o-Y growth during the quarter.
“Additionally, our key categories (face wash, shampoo, serums, moisturizer, sun care, and baby care) saw ~18% growth in 9MFY25. We are continuing to build in these categories and aim to gain significant share in the next 3-5 years,” the company said.
Honasa expanded its distribution network by 22 percent Y-o-Y, reaching over 2.16 lakh FMCG retail outlets as of December 2024, according to NielsenIQ data.
For the first nine months of FY25 (9MFY25), Honasa’s revenue reached Rs 1,533 crore, marking a 5.8 percent Y-o-Y growth. Adjusted for a one-time inventory correction in Q2, revenue stood at Rs 1,596 crore, reflecting a 10.2 percent Y-o-Y increase. The EBITDA margin for the nine-month period was 2.7 percent, or 5.9 percent after adjusting for the one-time correction.
Honasa also witnessed strong adoption via quick commerce, which witnessed growth of over 200 percent Y-o-Y in 9MFY25.
Despite this growth, CEO Alagh has previously also mentioned that quick commerce has led to a rise in competitive intensity, as firms like Blinkit, Swiggy Instamart, Zepto, BigBasket and others have made it easier to discover and launch new brands.
“I also think the rapid growth of quick commerce has increased competitive intensity to an extent. If you compare it to modern trade or general trade (like kiranas) then yes, the impact is more but not so much when it comes to e-commerce firms like Flipkart or Amazon,” he said in an earlier interview with Moneycontrol.
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