HONASA - Investment Analysis

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

🧼 Investment Analysis: HONASA (Honasa Consumer Ltd.)

Investment Rating: 2.9

📉 Fundamental Snapshot

ROE (6.39%) and ROCE (8.04%) are below par — inefficient capital deployment and low return generation.

P/E Ratio: 119, nearly 2× the industry average, flags extreme overvaluation.

PEG Ratio of 1.67 suggests growth isn't strong enough to justify the valuation.

EPS: ₹2.24 is modest, and coupled with a shrinking quarterly profit (-18%) makes earnings outlook shaky.

Dividend Yield: 0% — no passive income, signaling growth-over-income strategy.

Debt-to-Equity: 0.12 reflects a healthy balance sheet, offering financial flexibility.

🔍 Price & Momentum Indicators

Stock is trading below both 50-DMA and 200-DMA, confirming a bearish intermediate trend.

MACD: -8.77 and RSI: 30.4 — deep in oversold territory, suggesting a potential short-term technical bounce.

Volume is sharply lower than weekly average — investor interest seems to be fading.

🎯 Ideal Entry Price Zone: ₹200 – ₹225 This bracket hugs the recent low and aligns with technical support areas, helping manage risk at better valuations.

🛡️ Holding Strategy (If Already Invested)

Holding Period: 1–3 years only if profitability improves significantly.

Stay invested if

EPS trends upward beyond ₹4.

ROE/ROCE improve to double digits.

PEG moderates below 1.2.

Exit Strategy

Consider partial exit if stock reclaims ₹330–₹350, a psychological resistance zone.

Reevaluate if quarterly profits continue declining or PEG climbs above 2.

Full exit advisable if support around ₹200 fails, or fundamentals remain stagnant for two consecutive quarters.

While Honasa has consumer brand cachet, it needs sharper earnings execution to live up to its premium pricing. Want to stack it against new-age peers like Nykaa or established FMCG players for a better perspective? I’ve got just the dashboard.

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