Honasa Shares Rise Following Q2FY27 Results as Analysts Issue Mixed Views

Shares of Honasa Consumer Ltd traded higher on Monday following the release of the company's financial results for the second quarter of fiscal 2027. The stock traded at ₹484.40, marking an increase of 1.78 per cent or ₹8.35 from its previous close of ₹470.05. The stock opened the session at ₹485 and reached a high of ₹493.90 before trimming some of its morning gains. Trading volumes were heavy, recording 47.55 lakh shares, with sell-side orders accounting for 70.52 per cent of the order book. Over the past year, the stock has gained nearly 75 per cent and currently trades at a price-to-earnings (P/E) multiple of 53.67x.

For Q2FY27, Honasa reported consolidated revenue from operations of ₹731 crore, representing a 35.9 per cent year-on-year increase, which marks the company's highest growth rate since listing. Profitability also saw significant gains, with EBITDA nearly doubling to ₹93 crore. EBITDA margins expanded by 389 basis points to reach 12.7 per cent, while the profit after tax rose 86.7 per cent to ₹73 crore. Underlying volume growth stood at 31.3 per cent for the quarter.

The company's growth was supported by both its flagship and emerging brands. Mamaearth maintained high-teens growth, while younger brands such as The Derma Co and Aqualogica registered year-on-year growth exceeding 45 per cent. Additionally, secondary sales across both general trade and modern trade channels grew by more than 40 per cent.

Looking ahead, management has guided for margins to remain around 12.5 per cent in the second half of the fiscal year, while reiterating a four-year aspiration to achieve a 15 per cent margin.

The strong quarterly performance drew contrasting reactions from major brokerages. Jefferies maintained a Buy rating on the stock and raised its target price to ₹700, describing the period as the company's strongest quarter since its market debut. The brokerage upgraded its earnings estimates by 10 to 16 per cent, pointing to broad-based brand and channel momentum along with sharp margin outperformance.

In contrast, Citi retained a Sell rating on the stock with a target price of ₹390. The brokerage argued that Honasa's current valuation, trading at roughly 49 times FY28 earnings, already factors in sustained high growth and margin expansion. Citi noted that maintaining these levels could prove challenging amid intensifying market competition and elevated advertising expenditures.

"Honasa's latest quarterly numbers demonstrate strong execution in scaling both its flagship and emerging D2C brands, leading to significant volume growth and improved profitability. However, the divergence in analyst ratings highlights a critical challenge for high-growth consumer brands: balancing aggressive market expansion and heavy advertising spend against stretched market valuations. Sustaining this momentum will depend heavily on whether younger brands like The Derma Co and Aqualogica can continue their rapid growth trajectory while maintaining disciplined margin targets." — Dr. Shishir Gupta, Founder & CEO, StartupLanes