Honasa Consumer (HONASA) Q1 24/25 earnings summary

Executive summary

• Achieved 19.3% year-over-year growth in Q1 FY25, with revenue from operations of INR 554 Cr (Rs 5,540.57 million) and product business growing 20.3%.

• Gross margin improved to 71.7%, up 63 bps YoY; EBITDA margin up 201 bps to 8.3%; PAT grew 63% YoY to INR 40 Cr (Rs 402.59 million), marking record quarterly profitability.

• Strong volume-led growth, with continued market share gains in face wash (+115 bps) and shampoo (+50 bps); innovation contributed 9% of Q1 revenue.

• BBLUNT brand reached INR 100 crore ARR, growing 4x in two years; Ayuga brand discontinued due to underperformance.

• Unaudited standalone and consolidated financial results for Q1 FY25 were approved by the Board on August 9, 2024.

Financial highlights

• Gross margin at 71.7%, up 63 bps YoY; EBITDA margin improved by 201 bps to 8.3%.

• PAT increased by 63% YoY to INR 40 Cr (Rs 402.59 million), achieving highest ever quarterly PAT and EBITDA.

• Working capital remains at negative 12 days, supporting strong cash flow.

• Underlying volume growth (UVG) at 25.2%, indicating robust demand.

• Modern trade and quick commerce channels showed robust growth, with quick commerce now over 10% of online/offline revenues.

Outlook and guidance

• Maintains guidance of 20%+ growth and 150 bps margin expansion for FY25, except for the quarter when Project Neev inventory correction is executed.

• Inventory correction under Project Neev expected to impact one quarter by 150 bps on topline, but long-term growth and margin guidance remain intact.

• Focus on innovation, premiumization, and expanding offline presence, including entry into prestige pricing with international collaborations.

• Ongoing portfolio rationalization, discontinuing underperforming brands to sharpen focus.

• Management does not expect material financial impact from ongoing legal proceedings.