ICICI Securities initiates coverage on Mamaearth for target price of Rs 550

Brokerage firm ICICI Securities has initiated buy coverage on Honasa Consumer, the parent of beauty and personal care (BPC) products maker Mamaearth for target price of Rs 550 indicating upside of 28 per cent from its previous close price of Rs 429. ICICI Securities in a report said that Honasa’s business model is relatively more agile and lower-risk compared to traditional BPC companies

Honasa's business model stands as a testament to its ability to navigate the competitive terrain with relative ease. By adopting a digital-first approach, the company has streamlined its operations, enabling faster product launches and efficient resource allocation, crucial in the fast-paced field of BPC.

What sets Honasa apart from traditional BPC giants is its innovative strategies, as outlined by ICICI Securities. The company's emphasis on social-proof templates for brand building, coupled with a commitment to fast innovation, has garnered consumer trust and loyalty. Furthermore, Honasa's ingredient-based platform approach ensures a diverse product portfolio catering to evolving consumer preferences, ICICI Securities noted.

ICICI Securities underlines Honasa's capital-efficient marketing and distribution strategies, allocating a significant portion of its budget to digital channels. This approach not only amplifies brand visibility but also fosters consumer engagement, driving growth in both online and offline channels.

Mamaearth, Honasa's flagship brand, epitomises its success story. Launched in 2016 with a focus on toxin-free products for babies, Mamaearth has rapidly ascended to become one of India's fastest-growing BPC brands, boasting an annual turnover of Rs 1,000 crore within six years.

Expanding beyond Mamaearth, Honasa has successfully incubated and acquired additional brands, including The Derma Co, Aqualogica, Ayuga, Dr. Sheth’s, BBlunt, and Momspresso. These brands collectively contribute to Honasa's revenue, reflecting the company's prowess in portfolio diversification and brand management.

As Honasa sets its sights on offline expansion, ICICI Securities anticipates robust growth driven by superior consumer data insights. With a keen understanding of consumer behaviour and market dynamics, Honasa is set to capitalise on industry tailwinds, particularly in high-growth segments such as face care, body care, and colour cosmetics.