Mamaearth parent Honasa Consumer’s Q2 may raise FY27 earnings expectations

JM Financial Institutional Securities estimates Q2 consolidated revenue growth at 32%, and Ebitda margin 11.9%. Reported Ebitda margin in Q1 was 14.6%, aided by operating leverage and seasonal benefit; adjusted Ebitda margin excluding around 150 basis points impact of ESOP reversal in payroll cost, stood at 12.5%. Thus, Q2’s early double-digit operating margin is crucial, as it provides an early indication of whether operating leverage can be sustained and how much of the acceleration is sustainable.

Distribution

Honasa’s distribution is expanding, so consumer pull remains the test. “Our channel checks with distributors across key markets highlight that offline execution remains central to the next phase of growth. The offline channel accounts for ~35% of the business, while its contribution for Mamaearth is higher at 50%+,” said HDFC Securities. The company’s direct reach is around 120,000 outlets and is expected to reach 300,000 by FY31.

However, a wider distribution needs to be backed by higher consumer demand. HDFC’s checks indicate that retail margins, including schemes, are in the 27-35% range, versus base margins of 15-23%. Higher trade incentives help drive offtake and support distribution expansion, but they also increase the cost of converting availability into sales. So, if Honasa increases advertising, trade schemes or promotions to maintain the current pace of growth, some of the operating leverage expected in FY27 could be absorbed by these costs.

During the Q1 earnings call, management said the number of brands on quick-commerce platforms is rising rapidly. With limited physical space on these platforms, gaining share depends on brand strength, and consumer searches. This means Honasa needs its brands to generate stronger consumer pull.

The stock currently trades at 54 times estimated FY27 earnings, as per Bloomberg. The Street already seems to be assigning a meaningful value to the expected earnings recovery. So, when Q2 results are announced, investors will see if there’s enough evidence that earnings can exceed what is already priced in.

Shubham Dilawari

Shubham Dilawari is an equity research professional and financial journalist currently associated with Mint, where he covers markets, companies, and sector trends. He has over two years of combined experience in equity research and financial journalism, which helps him bring practical, real-world insights into his writing.He focuses on understanding how businesses work, tracking management commentary, and identifying long-term growth drivers across sectors. His background in stock research and financial analysis allows him to break down earnings, business strategies, and market trends in a clear and easy-to-understand manner.Shubham has cleared CFA Level I and holds the NISM Research Analyst certification, reflecting his strong foundation in financial concepts and research practices.He believes in keeping financial journalism simple, clear, and useful for readers. His aim is to explain complex financial topics in a way that helps investors and readers make better-informed decisions. He focuses on accuracy, clarity, and relevance in his work.Based in India, he closely follows market developments and stays actively engaged with the investing ecosystem.