Honasa Consumer

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, 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%.

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.

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.

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.

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.