HSBC has downgraded Honasa Consumer to ‘Reduce’ and set a target price of ₹242, implying a downside of about 5% from the current market price of ₹255. The brokerage’s cautious stance follows Honasa’s entry into the men’s personal care segment through the acquisition of the Reginald Men brand.
In its note, HSBC said Honasa has entered the men’s grooming space via the acquisition of Reginald Men at an enterprise value of around ₹2.0 billion, which implies an EV-to-revenue multiple of about 2.6 times. The brokerage acknowledged that the move reflects Honasa’s intent to diversify beyond its existing portfolio and tap into a growing personal care category.
HSBC noted that management appears to be targeting category and channel expansion to scale the Reginald Men brand to revenues of over ₹5 billion over time, compared with trailing twelve-month revenues of around ₹0.7 billion. While the brokerage appreciates the strategic initiative, it remains cautious about the probability of sustained scalability, particularly in the context of Honasa’s broader core portfolio.
According to HSBC, execution risks remain elevated as the company balances brand integration, competitive intensity in the men’s personal care segment, and the need to deliver consistent growth across its existing brands. The brokerage said these factors temper its confidence on near-to-medium-term upside, despite recognising the long-term opportunity in men’s grooming.
As a result, HSBC has maintained a conservative view on the stock, with its target price of ₹242 reflecting concerns around scalability and return visibility following the acquisition.
Disclaimer: This article is based on a brokerage report by HSBC. The views expressed are those of the brokerage and are for informational purposes only. This content does not constitute investment advice or a recommendation to buy or sell any securities.