Brokerage firm Goldman Sachs has initiated coverage on Honasa Consumer and has a Buy call on the stock. The brokerage firm believes that Honasa Consumer share price can rally upto 26% from the current market price. Goldman Sachs has a price target of Rs 570 per share for Honasa Consumer shares.
The brokerage believes that Honasa is well-positioned to leverage the growing eCommerce market and the rising demand for science-based skincare products, presenting substantial opportunities for both market share expansion and margin enhancement.
According to Goldman Sachs, Honasa is expected to achieve a remarkable 2.5x revenue growth and double its EBITDA margins over the fiscal years 2024 to 2030. This ambitious growth trajectory is supported by two primary strategies:
Scaling Existing Brands: Honasa plans to replicate the success of its flagship brand, Mamaearth, by scaling its other prominent brands, ‘The Derma Co’ and ‘Aqualogica.’ These brands are poised to capture a significant share of the expanding skincare market, bolstered by a strong eCommerce presence and innovative product offerings.
Expanding Offline Distribution: The company also aims to double its offline distribution network to 400,000 retail outlets by FY27. This expansion will enhance brand visibility and accessibility, driving further growth in both urban and rural markets.
Analysts at Goldman project a significant improvement in EBITDA margins for Honasa, forecasting an increase from 7.1% in FY24 to 10.2% by FY27. This upward trend is expected to continue, with margins potentially reaching 14% by FY30, reflecting the company’s efficient scaling and cost management strategies.
With a robust growth plan and a strong market position, Honasa stands out as a compelling investment opportunity, underpinned by its strategic initiatives and favorable industry dynamics, said the brokerage.
