The brokerage states that it likes Honasa’s brand seeding/scaling and execution speed. A steady increase in repeat offtakes (conversion of experimentative consumers into a sticky base + reduced dependence on innovation + rise in mix of core products) and continuous improvement in products/R&D may be able to drive the transition into a formidable BPC player from a challenger.
“Three things that set it apart are successful scale-up of multiple brands (like Mamaearth, The Derma Co, Dr Sheth’s, and Aqualogica), omnichannel operations (50:50 Online:Offline) and its financial discipline: 68% gross margin, 12-13% ME EBITDA margin, TDC EBITDA break-even and positive FCF,” says Umang Mehta, analyst at KIE.
KIE attributed Honasa’s success to its strong marketing acumen, flair for spotting emerging trends and capitalising on them, and nimble execution, however, also lists potential key risks of further deceleration in ME growth and a rise in competition from traditional BPC players/platforms.Honasa is India’s largest digital-first BPC player, with a portfolio of seven differentiated BPC brands. Since launching its first product in 2016, Honasa has demonstrated an enviable track record of speed and success in seeding and scaling several brands and achieving omnichannel command—all while maintaining sound financial discipline.
The shares of Honasa are trading 2% higher at Rs 432 on the BSE.(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)