Beauty may be skin-deep, but for Honasa Consumer, it’s finally showing up in the numbers. Mamaearth parent swung to profit during the September quarter, reversing a net loss a year ago. The quarter also saw a recovery in margins, stronger traction from younger brands and a faster offline expansion, all encouraging signs after a tough 2024 when a slowdown and inventory pressures weighed heavily on performance.
For Mamaearth, the real growth engines are the younger brands. The Derma Company clocked an ARR (annualised revenue run-rate) of Rs 750 crore with high single-digit EBITDA margins. Euromonitor has ranked it as India’s No.1 sunscreen brand for CY24, and the brand now aspires to scale up its moisturiser and shampoo segment to hit Rs 1,000 crore ARR over the next 1-2 years.
From inventory stress to renewed momentum
A year ago, Honasa was saddled with unsold inventory, slower revenue momentum and rising losses, a combination that triggered brokerage to downgrade the company’s rating, denting investor confidence. Competition intensified, marketing costs surged, and challenge of scaling across a fragmented BPC market started to weigh on the financials. With Mamaearth swinging back to profit this quarter and younger brands growing at a faster clip, the immediate pressures on the business may be easing. But can this recovery sustain?
Lumineve and Fang - The premium pivot
The bigger story this quarter is Honasa’s decisive push into premium categories, as the company entered the prestige skincare segment with Lumineve, launched exclusively with Nykaa and priced at 2.5x its existing portfolio. Analysts at JM Financial have pegged India’s prestige skincare market to touch $4 billion by 2030, leaving a large pool for Honasa to tap into.
Alongside skincare, Honasa has strategically bet on premium oral care through a 25% stake in Fang, a teeth-whitening and oral wellness brand. The small Rs 10 crore investment - at 5.7x net of sales and ARR of Rs 7 crore as on September 2025 – is a bet that premium oral care will be a major consumer trend over the next decade.
The management expects premiumisation tailwind as whitening and oral wellness categories expand, and Honasa is targetting to build long-term category leadership here.
Honasa’s New Bets – Can they Pay Off?
Nirav Karkera of Fisdom Research said Honasa’s next phase hinges on execution, especially as it enters more competitive categories. “The next leg of growth depends on whether Honasa’s younger brands can sustain momentum,” Karkera said. “Prestige skincare puts it up against entrenched players, so success will require strong brand adoption and real value delivery at premium price points.” On oral beauty, he added, “It’s a promising space but still early in its evolution. The category will need sustained investment before it can meaningfully move the needle on overall earnings.”
Vinit Bolinjkar, Head of Equity Research at Ventura Securities said Honasa’s premium forays can trigger a re-rating, if executed well. “The move into premium skincare and oral care aligns with where India’s beauty market is heading,” Bolinjkar said. “If Honasa scales these categories while improving margins and innovation, the market could start pricing in more structural earnings visibility and a potential re-rating.”
As Margins Improve, Brokerages Turn Constructive
Honasa’s gross margins have steadily strengthened and now average around 71%. JM Financial expects further improvement here as the mix shifts toward prestige offerings and scale efficiencies kick in. ICICI Securities too has upgraded the stock to Buy, highlighting a faster-than-expected pace of margin expansion as younger brands scale up and marketing spends tighten. The management has guided for FY26 EBITDA margin to hold around current levels of 8.2%, which is an improvement from the previous guidance of 7%. The company has reiterated plans to lift margins by 50-100 bps annually as operating leverage builds.
Case for a Re-rating?
Honasa’s stock is up ~20% YTD but still down ~17% over the past year, which reflects lingering concerns around category volatility, competition and execution. The street will now look for consistency in Mamaearth’s recovery, sustained +20% growth from younger brands, early traction for Lumineve and Fang, and margin discipline. Experts believe these metrics can be the groundwork for a possible re-rating going forward.
For now, the glow is back, but whether it turns into a lasting shine will depend on the execution efforts in the premium space.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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