HONASA - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 2.7

🧾 Core Financial Analysis

📉 Profitability & Growth

PAT Qtr: ₹25 Cr vs ₹26 Cr — ↓18.0% QoQ, showing weak earnings momentum.

EPS: ₹2.24 — very low, especially for a ₹265 stock.

ROE (6.39%) & ROCE (8.04%) — below average, indicating inefficient capital deployment.

💰 Cash Flow & Debt

Debt-to-Equity: 0.12 — low leverage, which is a positive.

Dividend Yield: 0.00% — no dividends, typical for early-stage growth companies.

Cash Flow: Likely weak due to low profitability and high reinvestment needs.

📊 Valuation Metrics

Metric Value Insight

P/E Ratio 119 Extremely overvalued vs industry PE of 59.2

P/B Ratio ~7.3 High, not justified by ROE or earnings

PEG Ratio 1.67 Suggests growth is priced in, but not backed by fundamentals

Intrinsic Value Estimated ~₹160–₹190 Based on earnings and sector benchmarks

🧴 Business Model & Competitive Advantage

Sector: New-age FMCG — Honasa Consumer owns brands like Mamaearth, The Derma Co., and Aqualogica.

Model: D2C (Direct-to-Consumer) with strong digital marketing and influencer-led campaigns.

Moat: Brand recall among Gen Z and millennials, fast product innovation cycle.

Growth Drivers: Increasing demand for natural, toxin-free personal care products.

Risks: High valuation, low profitability, intense competition, and dependence on digital channels.

📉 Technical & Sentiment Indicators

RSI: 30.4 — oversold, may signal short-term bounce.

MACD: -8.77 — bearish momentum.

DMA 50 & 200: Price below both — downtrend.

Volume: Well below average — weak investor interest.

💡 Investment Guidance

📌 Entry Zone (If Undervalued)

₹190–₹210 — closer to intrinsic value and 52-week low.

Avoid fresh entry at current levels unless there's a clear turnaround in earnings and sentiment.

📈 Long-Term Holding View

Speculative hold for high-risk investors.

Brand potential is strong, but fundamentals don’t justify current valuation.

Wait for consistent profitability and margin expansion before considering long-term accumulation.

Upside possible if execution improves, but downside risk remains high.

Would you like a side-by-side comparison with Nykaa or Marico to see how Honasa stacks up in the beauty and personal care space?

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