This article first appeared on GuruFocus .
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Net Sales Growth:36% YoY in Q2 FY27 highest growth quarter since listing (last 12 quarters).
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EBITDA:Doubled YoY; EBITDA margin at 12.7%.
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Gross Margin:Maintained at 70% despite crude cost pressures, aided by cost management and price increases.
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Volume Growth (UVG):31.3%.
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EBITDA Improvement Drivers:250270 bps from A&P and mix efficiencies; 110140 bps from operating leverage.
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Focus Categories:Now contribute 80%+ of revenue (up from ~70%); grew over 40% YoY; market size ~INR 50,000 crore with ~5% company share.
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Mamaearth:Continued high-teens growth in Q2; available at 3.2 lakh outlets (26% YoY growth in numeric distribution).
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Younger Brands:Accelerated to 45%+ YoY growth.
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The Derma Co.:Second INR 1,000 crore+ brand; strong profitable growth trajectory.
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Offline/General Trade:Same-store growth at ~30%+; 65,000 outlet reach for newer brand (vs. Mamaearth at ~300,000); Nielsen market share ~1.2% in face washes.
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Modern Trade:40%+ YoY offtake growth.
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Market Share Gains:140 bps in face wash; 50 bps in shampoo (Nielsen-measured).
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Cash Flow:Strong cash generation accompanying growth.
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Release Date: November 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Honasa Consumer Ltd ( NSE:HONASA ) reported its highest growth quarter since IPO, with net sales up 36% and EBITDA doubling to a 12.7% margin.
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Gross margin was maintained at 70% despite crude cost pressures, through cost management and price increases.
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Volume growth was strong at 31.3%, indicating healthy underlying demand.
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Focus categories now contribute over 80% of revenue and grew more than 40%, improving growth quality.
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Younger brands (excluding The Derma Co.) grew over 40% YoY, with The Derma Co. surpassing INR1,000 crore ARR.
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Offline expansion is progressing well: Mamaearth now available in 3.2 lakh outlets, with 26% YoY outlet growth and 40%+ modern trade offtake growth.
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Market share gains in core categories: 140 bps in face wash and 50 bps in shampoo, with strong consumer love metrics.
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BBlunt hair color portfolio growing 100%+ YoY post-relaunch, with plans to enter hair color with another brand.
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Management targets 15% EBITDA margin over the next four years, with current trajectory on track.
Negative Points
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Volume growth (31.3%) lagged value growth (36%) due to MRP increases and channel mix, raising concerns about price-led growth.
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E-commerce channel growth was restricted to around 20%, which may limit overall growth momentum as younger brands are predominantly online.
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Mamaearth faces a higher base in H2, making it challenging to sustain high-teen growth, though management remains confident.
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A&P spends remained similar as a percentage of sales, with margin improvement largely driven by channel mix rather than operating leverage.
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Dr. Sheth's brand proposition is under review to better align with the evolving active consumer, indicating potential repositioning risks.
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Q3 sequential growth guidance was not provided, leaving uncertainty about near-term momentum.
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Margin guidance for FY27 remains conservative at 150-200 bps improvement, despite Q2 outperformance, suggesting limited upside visibility.
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Reginald Men brand growth was not disclosed separately, raising questions about its contribution to younger brands' performance.
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Hair color category entry with a new brand is still under consideration, with no timeline provided, creating uncertainty.
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Overall BPC market growth sustainability was discussed qualitatively, but no quantitative outlook was given, leaving investors without clear growth targets.
Q & A Highlights
Q: Excluding The Derma Co., what is the growth rate of the younger brands portfolio, given that e-commerce channel growth appears restricted to around 20%? A: Varun Alagh (CEO): Even excluding The Derma Co., all the other younger brands are growing at 40% plus, which is quite healthy. The reported e-commerce growth does not capture all D2C channel growth that these young brands generate.
Q: With Mamaearth's base getting higher in H2, what gives you confidence that high-teens or mid-teens growth can hold up, and how would you attribute it between focus categories, distribution gains, and innovation? A: Varun Alagh (CEO): Mamaearth's high-teens growth is coming equally from online and offline, driven by stronger consumer love and franchise metrics such as SAH, PDO, and brand affinity. About 80% of the growth delta is coming from current stores rather than new distribution, which gives confidence that this will continue next year as well.
Q: Which of the focus categories are contributing most to the gain in focus category contribution, and are smaller categories growing at similar momentum? A: Varun Alagh (CEO): Face wash is the largest and fastest-growing category, followed by shampoo, sunscreen, and moisturizers, all of which grew more than 20%. It is not just one category winning; all four large categories have had extremely healthy growth for the company.
Q: From a macro perspective, how sustainable is the current BPC market growth, and what levers are you tracking to ensure quality of growth remains robust? A: Varun Alagh (CEO): India's per capita beauty spend is among the lowest in Asia, even below Bangladesh, and Indonesia consumes 4x India's per capita BPC. With women joining the workforce and rising men's awareness, the category should grow strongly for the next decade. Quality of growth is tracked through brand strength, independent research, and Google searches, which give confidence that growth is healthy.
Q: Is the margin improvement driven by a shift toward better channel mix (higher B2B quick commerce and offline share reducing sales commissions) rather than operating leverage? A: Varun Alagh (CEO): Yes, part of the A&P improvement leverage is on account of the channel mix change, which is showing up in other expenses improvement.
Q: Q2 margin improvement is trending much higher than the 150-200 bps guidance. Is there reason to remain cautious in H2, or could you update the guidance? A: Varun Alagh (CEO): There is no benefit in being too aggressive; conservative is the better place to be. Structurally the business has done better, and the current level seems to be a foundation we are very comfortable maintaining.
Q: How is BBlunt performing, and do you intend to enter the hair colour category with another brand? A: Varun Alagh (CEO): BBlunt's hair colour portfolio is growing at 100% plus YoY post relaunch last year, and styling is growing well, especially on quick commerce. The care category (shampoo and conditioners) is doing okay, and we plan to relaunch our mix there. We are considering entry into hair colour from another brand and will communicate shortly once launched.
Q: Volume growth is lower than value growth this quarter. What is the reason for this divergence, and will the trend sustain as offline grows faster? A: Varun Alagh (CEO): The divergence is due to some MRP increases, including price-driven growth in hair on account of the crude impact, plus channel and brand mix. Nothing of major concern. From an overall company perspective, we do not expect a significant mix change toward offline, as e-commerce and offline are both expected to grow strongly across different brand partitions.
Q: As younger brands scale and require higher brand spend, how should we see the margin expansion journey ahead? A: Varun Alagh (CEO): We want to reach a 15% EBITDA margin profile over the next four years, and that plan already assumes young brand growth and new category launches. There is no year-wise goal; some years will see exceptional improvement like the current year, while others may see only 50-70 bps as we double down on growth.
Q: With H1 already at a 13.5% EBITDA benchmark, how do you expect margins to shape up in Q3 and Q4 given festivities and accelerated activations? A: Varun Alagh (CEO): We are confident of holding our current trajectory and being in the same range of around 12.5%.
Q: Can you highlight qualitatively how Aqualogica and Dr. Sheth's are shaping up in terms of acceptance, growth, and newer activations? A: Varun Alagh (CEO): Both are shaping up very well in their own cohorts. Aqualogica is focused on winning in sunscreens, fragrant body care, and moisturizers, with improving Gen Z acceptance measured by TOM spontaneous preference surveys. Dr. Sheth's was positioned as a bridge between naturals and actives, and with the active consumer population growing, we are relooking at the brand proposition to make it more relevant and upsell to active buyers, with ranges like Botox and collagen doing well for a higher age cohort.
Q: Can you give the ARR for The Derma Co. and the growth of younger brands excluding Reginald? A: Varun Alagh (CEO): Excluding Reginald, younger brands are also growing at 40% plus. The Derma Co.'s ARR continues to be in the INR1,000 crore plus range as disclosed last time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
