Mamaearth up 28% since listing, Jefferies ups target after Q2 show

Shares of Honasa Consumer, the owner of beauty and personal care brand Mamaearth hit 20 percent upper circuit to Rs 422.5 per share on November 23 after the company reported robust Q2 financial results with the net profit doubling to Rs 30 crore. Post Q2 results, Honasa Consumer earned favourable reactions from Jefferies, which has put a ‘buy’ rating on the stock. Jefferies has set a share price target of Rs 530 on the stock, which implies 25 percent upside from current levels.

Jefferies has also upgraded its earnings per share (EPS) estimates on Honasa Consumer stock by 5-6 percent.

While Mamaearth’s growth decelerated from the fiscal first quarter, Jefferies noted the robustness of Honasa Consumer's financials. The quarter-on-quarter slowdown was due to Enterprise Resource Planning (ERP) changeover; but the true picture of the company's performance is reflected in the H1 growth of over 35 percent, said Jefferies.

Also read: Mamaearth Q2 results: Profit doubles to Rs 30 crore

Driving this growth are the new brands under the Honasa Consumer umbrella, with Dr Sheth recently becoming the fourth brand to surpass Rs 150 crore in Annual Recurring Revenue (ARR). Mamaearth, the flagship Honasa brand, has notched up double-digit growth in the first half of the year.

The management's confidence in both growth and margin further bolsters the positive outlook for Honasa Consumer. Despite the challenges faced in Q2, the company remains optimistic about its trajectory, and the new brands are reportedly scaling up successfully.