Honasa Consumer (HONASA) Q3 24/25 earnings summary

Executive summary

• Non-Mamaearth brands delivered over 30% year-to-date growth, now contributing more than 40% of total revenue, up from 25% YoY, while Mamaearth brand performance remained flat to declining, with pilots and messaging/product/media mix changes being tested.

• Returned to profitable growth in Q3FY25 with revenue from operations at INR 518 Cr, up 6.0% year-over-year, and PAT of INR 26 Cr, maintaining a 5.0% PAT margin.

• Distribution system overhaul (Project Neev) completed in top 50 cities with 150+ new distributors, expanding direct outlet coverage to ~90,000 by Dec'24.

• Quick commerce channel grew to 7-8% of business, becoming the fastest-growing channel, with 200%+ YoY growth in 9MFY25.

• Expanded distribution, reaching 216,814 FMCG retail outlets in India, a 22% increase year-over-year.

Financial highlights

• Q3FY25 revenue from operations: INR 518 Cr (6.0% YoY growth); 9MFY25: INR 1,533 Cr (5.8% YoY growth); Q3FY25 gross profit margin: 70.0% (up 132 bps YoY); Q3FY25 EBITDA: INR 26 Cr (5.0% margin); Q3FY25 PAT: INR 26 Cr (5.0% margin).

• Gross margin expansion driven by higher contribution from younger, higher-margin brands focused on skincare.

• EBITDA margin declined from 8% to 5% due to increased marketing investments and ongoing channel transition.

• Free cash flow in Q3FY25: INR 43 Cr; working capital cycle remains negative.

• Deferred tax asset of INR 5 crore recognized this quarter due to subsidiary merger; normal tax rates expected going forward.

Outlook and guidance

• Full effect of distribution transition expected in the next two quarters, with growth mode anticipated in FY26 H2; Q4 to see higher marketing spend for Mamaearth pilots, normalization expected from Q1 FY26.

• Long-term revenue aspiration of INR 4,000 crore and double-digit margins by decade end; margin recovery to FY24 levels by FY26, with improvement from FY27.

• Focus on premiumization and innovation in face wash, serum, and moisturizer categories, with moisturizers expected to grow over 3x faster than creams.

• Targeting significant share gains in focus categories over the next 3-5 years.

• Quick-commerce channel supporting multi-channel expansion.