CLSA has upgraded Honasa Consumer to outperform from its earlier rating and raised the target price to ₹333, citing stronger-than-expected earnings momentum and improving margins. The upgrade follows the company’s first-quarter results, where revenue grew 7.4% year-on-year in line with expectations, underpinned by an underlying volume growth of 10.5%. Growth in the quarter was partly impacted by lower sunscreen sales due to the early onset of the monsoon, which the brokerage estimates shaved around 200 basis points off topline growth.
EBITDA margin expanded by 264 basis points sequentially to 7.7%, leading to a 47% beat on CLSA’s estimate and a 44% beat on consensus. Management has guided to maintaining an EBITDA margin of around 7% for FY26, with plans to expand it by 100–150 basis points annually over the next four to five years. CLSA has raised its earnings forecasts for FY26–28 by 15–26% to reflect the stronger margin trajectory and sustained volume growth outlook.
The brokerage views Honasa’s consistent operational improvement, premiumisation efforts, and disciplined cost management as key drivers for long-term growth. The guidance for steady margin expansion reinforces confidence in the company’s ability to deliver earnings growth ahead of previous expectations.
Disclaimer: The views and recommendations made in this article are those of CLSA. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
