Honasa Consumer Limited — Q4 FY25 earnings call

Call held 22 May 2025

Management summary

Honasa Consumer reported a strong Q4 FY25 with 13.3% revenue growth and 21.2% UVG, driven by strategic focus on Mamaearth's core categories and robust performance of younger brands. The company significantly expanded its direct distribution network and saw green shoots from its investment allocation changes. While FY25 profit was impacted by one-off corrections, management expressed confidence in future growth and margin improvement.

Highlights

  • Q4 revenue grew 13.3% YoY, indicating healthy double-digit growth.

  • UVG (Underlying Volume Growth) was robust at 21.2%, demonstrating strong consumer traction.

  • Gross profit improved year-over-year, contributing to overall financial health.

  • EBITDA remained stable compared to the previous quarter, despite strategic investments.

  • Generated INR74 crores of cash in Q4, reflecting efficient working capital management (negative 24 days).

  • Mamaearth's focus categories (70% of brand) showed positive double-digit growth in e-commerce and modern trade.

  • Younger brands grew over 30% YoY, with Derma Co achieving INR100 crores ARR in offline channels.

  • Direct distribution network expanded significantly to 102,000 outlets, up from 45,000-50,000.

Concerns

  • FY25 profit took a hit due to 'project Neev execution and corrections'.

  • Mamaearth's non-focus categories are declining, putting pressure on overall brand topline growth.

  • Younger brands require higher A&P spend due to lower awareness, impacting overall profitability in the short term.

Key financials

2 periods

Q4

  • Revenue Growth
    13.3%
  • UVG Growth
    21.2%
  • Cash Generated
    ₹74 Cr
  • Working Capital Days
    -24 days

FY25

  • Revenue
    ₹2,067 Cr
    YoY +7.7%

What they filed

Q1 FY27: revenue up 19.2%, net profit up 110.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue417 505 523 584 527 +26%587 +16%608 +16%696 +19%
EBITDA-30 22 24 42 44 +247%61 +177%68 +183%100 +138%
Net profit-15 25 25 40 38 +353%48 +92%64 +156%84 +110%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • M&A Cosmogenesis Acquisition · Integrated

    Strengthening R&D capabilities

    Helped strengthen R&D muscle and product improvements.

    This year, we've done a fair bit of strengthening across our R&D capabilities via the acquisition of Cosmogenesis and then further strengthening our R&D muscle. It's already showing in our product improvements and superiority that we've been driving.
  • Liquidity Cash ₹74 Cr Generated INR74 crores of cash in Q4, with negative 24 days working capital.
    and we generated almost INR74 crores of cash being a negative 24 days working capital for the company.

Guidance & targets

Profitability

  • EBITDA Improvement Profitability · FY26 · High confidence 250 basis points
    Even in terms of EBITDA, of course, compared to last year, of course, we will see significant improvement by about 250 basis points over last year in FY '25.

    — Varun Alagh

  • EBITDA Profile Profitability · by exit · High confidence FY24 levels
    And by the exit, we hope in terms of EBITDA profile, we should get back to our FY '24 levels

    — Varun Alagh

Distribution

  • GT Outlets Distribution · next year, 12 months from now · High confidence 150,000

    From 100,000 today

    So in the coming year, we would like our GT channel to add at least 50,000 more outlets into our direct distribution from a 12-month unique coverage perspective. So we would want to see this number which is 100,000 to get to 150,000 as we exit the next year, 12 months from now.

    — Varun Alagh

Brand Strategy

  • Mamaearth Focus Categories Contribution Brand Strategy · next 2 to 3 years · High confidence 85% to 90%

    From 70% today

    And we believe with the kind of efforts we want to put in over the next 2 to 3 years, they should get to 85% to 90% of the brand's contribution.

    — Varun Alagh

  • Mamaearth Focus Categories Growth Brand Strategy · going forward · High confidence double digits
    I think our whole goal will be that these focus categories continue to grow in double digits as we move forward.

    — Varun Alagh

  • Younger Brands Growth Brand Strategy · Y-o-Y · High confidence 30% plus
    Younger brands, of course, continue to drive good growth momentum for FY '25, young brands have grown at 30% plus Y-o-Y.

    — Varun Alagh

  • Non-focus Categories Contribution Brand Strategy · next 2 to 3 years · High confidence 15%

    From 30% today

    we want that contribution to reduce from 30% to 15% and contribution of focus categories to increase significantly over the next 2 to 3 years.

    — Varun Alagh

Category Growth

  • Serum Category Growth Category Growth · next year · High confidence 30%
    It's still we expect the category to grow at close to those 30% kind of numbers in the next year as well.

    — Varun Alagh

Market context

  • Value Growth Revenue · FY26 · High confidence double-digit
    The plan would, of course, be that we deliver a double-digit growth in FY '26 in terms of value.

    — Varun Alagh

What to watch in Q1 FY26

Mamaearth Overall Y-o-Y Growth

next 1-2 quarters
Current Focus categories positive double-digit, overall difficult to comment
Target Positive Y-o-Y growth for Mamaearth as a whole

Why it matters

Indicates the success of the strategic shift and overall brand health beyond specific categories.

I wouldn't even want to sort of comment on that because the math is that these focus categories where we are putting in the effort, they did show the right kind of green shoots. And now it's only been sort of 2 to 3 months of execution of those strategies.

Risks & concerns

  • Impact of 'Project Neev' execution and corrections on profit

    medium

    FY25 profit took a hit due to 'project Neev execution and corrections' and associated costs.

    Profit did take a hit because of the project Neev execution and corrections that we had to sort of take.

    Management acknowledged

  • Declining non-focus categories impacting Mamaearth's overall topline growth

    medium

    The decline in non-focus categories puts pressure on Mamaearth's overall year-over-year topline growth.

    But just the fact that the non-focus parts declining does put a pressure on the overall top line growth.

    Analyst acknowledged

  • Higher A&P spend for younger brands due to lower awareness

    low

    Younger brands require higher advertising and promotion spend to build awareness, which can impact short-term profitability.

    the reality has been that the younger brands have been growing faster, and these are brands which do require higher A&P spend because they are young, they're 3 to 4 years old and hence, the awareness is low.

    Management acknowledged

Q&A highlights

7 direct
Mamaearth's overall Y-o-Y growth and turnaround Partial
in Mamaearth, our entire focus is now on certain set of focus categories. In those focus categories, yes, our growth is positive, and it is in double digits in specific channels like e-commerce and modern trade.

Analyst is probing for overall brand recovery, but management focuses on specific categories, indicating overall brand might still be negative or flat.

Asked by Percy Panthaki

Differential performance of other brands (30%+ growth) Direct
No, the number actually refers to aggregate. We're not disclosing brand level performance. But of course, that aggregate is arrived by certain brands being above that and certain brands being below that.

Clarifies that the 30%+ growth for younger brands is an aggregate, not necessarily uniform across all brands, which could mask underperformers.

Asked by Percy Panthaki

Stabilization of GT distribution and inventory levels Direct
Yes. I mean we are almost at the end of that process. Some of that secondary-primary gap is BAU because on an ongoing basis, there is also sort of damage expiry that you take back and sometimes secondary-primary gap is because of that also. But now it's not because of inventory levels, our inventory levels are absolutely in the right range. So going forward, that is not something that we see as an issue.

Addresses a key concern about past distribution disruptions and confirms that inventory levels are now healthy, signaling an end to the cleanup phase.

Asked by Percy Panthaki

Management bandwidth focus post-cleanup Direct
Vivek, so I think the management bandwidth is now fully dedicated to getting our strategy into execution. Our strategy has two parts to it. The first part was where to play, which is identifying the right categories and partitions in which we want to play. And second was how to play.

Indicates a shift from problem-solving (cleanup) to growth-oriented execution, which is a positive signal for future performance.

Asked by Vivek M.

Discrepancy between UVG (20%) and topline growth (13%) Direct
So there are actually two sort of core reasons of why this sort of growth is higher in terms of UBG versus. We have 2 types of businesses, right? We have a B2C business and we have a B2B business. And our business on marketplaces like Amazon, Flipkart as well as our D2C business falls in the basket of B2C businesses. And then the entire business of modern trade, quick commerce, GT and falls in the space of B2B business. Now B2B businesses have lower realization on revenue compared to B2C businesses. So for each unit sold, you make lesser revenue in B2B compared to B2C. And the contribution of B2B businesses for us has been going up.

Explains the difference, attributing it to a higher contribution from B2B channels (modern trade, quick commerce, GT) which have lower revenue realization per unit compared to B2C.

Asked by Jitendra Arora

Outlook on A&P spend as a percentage of revenue Direct
Like I mentioned, this is a bucket from which we see leverage in the coming years. And hence, we want to drive effectiveness and make sure that as a percentage, it keeps going down over years.

Management indicates a commitment to improving A&P efficiency, which could lead to margin expansion in the future.

Asked by Mehul Desai

Learnings from low unit price packs and future strategy Direct
No, actually, very healthy learning and a very relevant sort of question as well. Like, for example, to give you a reference, in face washes, most of the brands which are bigger than us in terms of share today, the 50 ml to 100 ml ratio of is skewed almost 3x towards the 50 ml pack. While in our case, currently, the pack is actually smaller than. In the last 1 year, we have seen a very good traction on our execution on that pack.

Highlights successful experimentation with smaller pack sizes, indicating a potential growth driver and strategy to capture market share, especially in face washes.

Asked by Manoj Menon

Strategy for non-focus categories under Mamaearth Direct
Nitin, I think strategically, we're just activating them, serving them, being tactically present wherever the sort of be it in online or offline these categories exist. We don't intend to invest marketing monies in them and sort of that's how we see it in terms of that cluster size also, we want that contribution to reduce from 30% to 15% and contribution of focus categories to increase significantly over the next 2 to 3 years.

Clarifies that non-focus categories will be maintained tactically without significant investment, aiming to reduce their contribution to overall revenue, allowing resources to be concentrated on high-growth focus areas.

Asked by Nitin Gupta

2 min read 6 chapters

Detailed narrative

Q4 and FY25 Financial Performance Overview

Honasa Consumer reported a healthy double-digit growth of 13.3% in Q4 FY25, with a strong Underlying Volume Growth (UVG) of 21.2%. For the full fiscal year FY25, the company achieved INR2,067 crores in revenue, representing a 7.7% growth. Gross profit improved year-over-year, and EBITDA remained stable in Q4. The company also generated INR74 crores of cash in Q4, reflecting a negative 24 days working capital, although full-year profit was impacted by 'project Neev' execution and corrections.

Mamaearth's Strategic Shift and Performance

Mamaearth, the core brand, has shifted its focus to key categories like facewash, shampoo, sunscreen, moisturizer, and baby products, which now contribute 70% to the brand's revenue. These focus categories demonstrated positive double-digit growth in Q4 in e-commerce and modern trade channels. The company aims to increase the contribution of these focus categories to 85-90% of Mamaearth's revenue over the next 2-3 years, while tactically managing non-focus categories to reduce their contribution from 30% to 15%.

Distribution System Enhancements and Offline Growth

The company successfully transitioned its direct distribution system, increasing direct distributor contribution from 38% to 71%. The direct distribution network expanded significantly, reaching 102,000 outlets, up from 45,000-50,000. This improved system is benefiting other brands like Derma Co, which achieved INR100 crores Annual Run Rate (ARR) in offline channels (GT plus MT) in March. The target is to further expand GT direct distribution to 150,000 outlets over the next 12 months.

Younger Brands and Innovation Focus

Honasa's younger brands collectively grew over 30% year-over-year in FY25. The company continues to prioritize innovation, particularly in prestige categories, with first-to-India launches like micronedle-based serum shots and Vitamic C-based ampoule kits by Derma Co, and Pdrn as an active by Dr. Sheth's. R&D capabilities have been strengthened through the acquisition of Cosmogenesis, leading to product improvements like enhanced serum penetration and gel face washes outperforming market leaders in blind tests.

AI Integration and Future Outlook

The company is actively integrating AI into its operations, with a dedicated team working on agentic workflows to enhance efficiency across marketing, supply chain, and finance. Examples include AI-powered skin analyzers, purchase assistants, and content generation. Management believes AI will significantly improve effectiveness and efficiency, with a focus on building internal AI tools this year. The overall strategy is now focused on execution, with management bandwidth fully dedicated to achieving growth targets.

A&P Spend and Margin Strategy

Management views A&P spend as a bucket for potential leverage and aims to drive effectiveness to reduce it as a percentage of revenue over the years, contributing to EBITDA improvement. While younger brands currently require higher A&P spend due to lower awareness, the company expects overall EBITDA profile to return to FY24 levels by exit, with a significant improvement of 250 basis points over FY25.

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