ICICI Securities has reiterated its BUY call on Honasa Consumer, setting a target price of Rs 400 against the current market price of Rs 312, implying a potential upside of 28%. The research house’s conviction is anchored in Honasa’s strategic recalibration, robust execution, and innovative use of technology to drive growth in the beauty and personal care (BPC) sector. Honasa is leveraging proprietary formulations, AI-driven insights, and a sharpened focus on core categories to overcome recent operational headwinds and position itself as a first mover in high-growth product segments. Investors are advised to consider the company’s evolving strategy, improving financial discipline, and strong brand portfolio, while remaining cognizant of competitive and execution risks.

ICICI Securities Endorses Honasa Consumer: BUY Call with Rs 400 Target

ICICI Securities has maintained a high-conviction BUY recommendation on Honasa Consumer, projecting a 12-month target of Rs 400 per share, representing a 28% upside from current levels. This positive stance is underpinned by management’s renewed strategic clarity, improved execution, and Honasa’s ability to disrupt traditional beauty categories with innovative products and digital-first branding.

Strategic Recalibration: Focusing on Core Categories and Execution

Honasa Consumer is redefining its business playbook by balancing “where to play” and “how to play,” shifting from a broad digital scale-up to a more focused approach in select, high-potential segments. The company will concentrate on categories where it enjoys a competitive edge—face wash, shampoo, sunscreen, moisturizer, face serums, lipsticks, and baby care. Within these, Honasa is targeting large consumer partitions, such as anti-dandruff shampoos and oil-control face washes, to maximize category leadership.

Innovation and First-Mover Advantage in Product Development

Honasa is capitalizing on its first-mover advantage in high-efficacy skincare formats, such as serums and micro-needle treatments, and continues to invest in superior proprietary formulations. The Derma Co. (TDC), a key brand, has reached Rs 5 billion in revenue, while acquired brands like Dr. Sheth’s and BBlunt have seen exponential growth post-acquisition. The company’s suncare segment, driven by gel-based and climate-specific formulations, now commands a 20% online market share and contributes over Rs 5 billion in revenue.

AI-Driven Insights and Digital Marketing Transformation

Leveraging artificial intelligence and large language models, Honasa analyzes real-time digital trends to accelerate product development and deliver highly targeted, customized marketing campaigns. This data-centric approach enables rapid identification of emerging consumer preferences and supports the launch of products with a first-mover edge. AI is also used for personalized engagement, such as customized video reminders for cart abandonment, enhancing conversion rates and customer loyalty.

Operational Discipline: Distribution, Inventory, and Financial Controls

To address past distribution challenges, Honasa has transitioned to direct distributors in the top 75 cities, reduced channel inventory, and enforced stricter cash collection norms, shortening distributor credit cycles from 45 to 30 days. The implementation of Distribution Management Systems (DMS) and Sales Force Automation (SFA) tools has improved transparency, secondary sales visibility, and financial discipline across the supply chain.

Premiumization and Brand Portfolio Enhancement

Honasa is actively premiumizing its product portfolio, launching high-science, high-efficacy products exclusively online and conducting rigorous blind testing against competitors. Over 80% of current formulations are proprietary, with the ambition to reach 100%. The company also refines product communication—for example, rebranding “Onion Shampoo” as “Anti Hair Fall Shampoo” to better articulate consumer value.

Financial Performance and Growth Outlook

Honasa’s financials reflect a robust growth trajectory, with revenue, EBITDA, and net profit expected to grow at CAGRs of 16%, 96%, and 85% respectively over FY25–27E. The company aspires to double its FMCG growth in the long term, targeting Rs 50 billion in annualized revenue by 2030. Management expects EBITDA margins to reach double digits within 4–5 years and high teens in 7–8 years.

Key Financial Metrics and Valuation Table

Stock Levels and Investor Targets

Current Market Price (CMP): Rs 312

Target Price: Rs 400 (12-month horizon)

Key Support Level: Rs 290 (recent low; prudent stop-loss for investors)

Key Resistance Level: Rs 350 (intermediate target; watch for breakout on strong volumes)

Risks to Investment Thesis

Investors should monitor the following risks: heightened competition, execution slippage, challenges in scaling new brands, and a potential prolonged slowdown in the flagship Mamaearth brand. While Honasa’s strategy and execution are improving, the BPC sector remains highly competitive and dynamic.

High-Conviction Growth Story with Execution Watchpoints

ICICI Securities’ BUY call on Honasa Consumer is premised on the company’s strategic agility, digital innovation, and operational discipline, which collectively underpin its ambitious growth targets and margin expansion plans. The stock’s re-rating potential hinges on sustained execution, successful premiumization, and the ability to outpace competition in core categories. Investors seeking exposure to India’s evolving BPC landscape should consider Honasa Consumer as a high-growth, innovation-driven opportunity, with a recommended target of Rs 400 and a disciplined approach to risk management.