Antique Stock Broking initiates coverage on Mamaearth

Initiating coverage: Antique Stock Broking has initiated coverage on Honasa Consumer, the operator of Mamaearth, a leading digital-first beauty and personal care company. With a slew of differentiated products and a strong focus on the direct-to-consumer (D2C) channel, Honasa has quickly established itself as a dominant player in the market, the brokerage said in a note.

The firm has recommended a ‘hold’ stance on Honasa Consumer for target price of Rs 400, based on 60 times the estimated earnings for fiscal year 2026. According to Antique Stock Broking, while Honasa has shown impressive growth potential, balancing growth with profitability remains a challenge, especially in the medium term.

Honasa's flagship brand, Mamaearth, has been instrumental in the company's success, reaching a significant scale with an annual revenue of Rs 1,200 crore. However, Antique Stock Broking suggests that Mamaearth may have entered a mature stage, with its growth rate expected to moderate to 14 per cent over the next few years.

Despite the slowdown in Mamaearth's growth, Honasa has been successful in disrupting the beauty and personal care category, traditionally dominated by large multinational players. The company's strategy of launching products online first and then expanding into offline channels has proven effective in driving penetration.

Moreover, Honasa has expanded its portfolio by introducing five new brands, each with a differentiated value proposition catering to various segments of the beauty and personal care market. While these emerging brands are expected to contribute significantly to future growth, the process of creating and scaling them up could constrain overall profitability in the near term.

Antique Stock Broking stresses the importance of offline expansion for Honasa's future profitability. However, scaling up the offline channel is expected to be a gradual process, with challenges such as competition from established FMCG players, pricing disparities between online and offline channels, and managing channel inventory.

Overall, while Honasa Consumer demonstrates strong growth potential driven by innovative product launches and distribution expansion, Antique Stock Broking believes that the current valuation already reflects much of the optimism surrounding the company's prospects. Therefore, they advise a cautious approach and recommend holding positions with a target price of Rs 400.