CLSA has initiated coverage on Honasa Consumer, the parent company of Mamaearth, with a ‘Hold’ rating and a target price of ₹303/share, citing both structural positives and intensifying competition in the beauty and personal care (BPC) segment.
According to the brokerage, Honasa is well-positioned to cater to India’s growing middle-class consumer base, thanks to its omni-channel strategy and growing product portfolio. Since the launch of Mamaearth in 2016, the brand has successfully tapped into digital-first consumers, but the overall competitive intensity in BPC has ramped up significantly, with larger FMCG players and new-age brands crowding the space.
Despite underwhelming recent performance on the stock, CLSA remains cautiously optimistic. It expects the company to deliver a 16% CAGR in sales and a 42% CAGR in earnings per share (EPS) from FY25 to FY28, driven by operating leverage, cost rationalization, and new category expansion.
However, the brokerage notes that valuations already price in a significant portion of this growth, and any slip in execution or margin improvement could cap near-term upside. CLSA recommends a ‘wait and watch’ approach, given that the stock trades at elevated multiples compared to other mid-cap consumer names.
