HDFC Securities keeps Buy on Honasa, sees ₹550 target on offline-led growth
HDFC Securities reiterated its Buy call on Honasa Consumer with a September 2027 target price of ₹550, citing expected 25% Q2 FY27 revenue growth and expanding offline distribution. Offline contributes about 35% of sales, while Mamaearth accounts for more than half of the business.
The development
HDFC Securities reiterated a Buy on Honasa Consumer with a Sep‑27 target price of Rs 550, citing 25% Q2 FY27 revenue growth expectations and offline expansion. Offline contributes ~35% of the business, while Mamaearth exceeds 50%.
The numbers
- 25%
- Q2 FY27
- ~12%
- Sep‑27
- Rs 550
- 5x
- 5.25x
- ~40x
- ~49x
- ~35%
- 50%+
- 3x
- three years
- ~30 days
Why it matters to operators and investors
Honasa’s reliance on Mamaearth for over half of revenue highlights both the strategic value of brand-led distribution expansion and the need to diversify its portfolio.
What to watch next
- Q2 FY27 revenue growth versus the expected 25% level.
- Offline sales mix moving above the current roughly 35% of revenue.
- Number of active outlets, same-store throughput and repeat ordering from new stores.
- Mamaearth growth relative to the rest of the portfolio and its share of company sales.
- Gross margin, EBITDA margin and advertising-plus-promotion spending trends.
- Inventory days, receivables and operating cash flow as offline distribution scales.
- Competitive pricing and shelf-space activity from large FMCG, beauty and D2C rivals.
- Accelerate outlet additions in general trade, modern trade, pharmacies and tier-2/tier-3 cities.
- Prioritize Mamaearth hero SKUs with demonstrated offline repeat rates before broadening assortment.
- Use distribution data to improve replenishment, reduce stock-outs and prevent channel inventory accumulation.
- Increase cross-selling of The Derma Co., Aqualogica and other brands through the offline network to reduce dependence on Mamaearth.
- Balance promotional investment against gross-margin protection as offline trade terms expand.
The counter-case
The ₹550 target depends heavily on sustained 25% revenue growth, successful offline execution, and Mamaearth retaining brand momentum. Offline expansion can dilute margins through distributor commissions, higher trade spends, inventory risk and working-capital needs. With Mamaearth contributing over half of revenue, the business remains concentrated in one brand; any slowdown in consumer relevance, increased discounting or competition from larger FMCG and digital-native beauty players could materially hurt growth. A long-dated September 2027 target also leaves substantial room for forecast error.