Honasa Consumer shares experienced a notable decline of nearly 5% during Tuesday's trading session, reaching a low of Rs 445 per share from its previous close of Rs 466.50. This downturn was largely attributed to significant block deals executed on the exchange, involving a high turnover of shares.
Several prominent existing shareholders, including Peak XV Partners Investment VI, Sequoia Capital Global Growth Fund III - US/India Annex Fund, L.P., and Redwood Trust, were reportedly looking to divest up to 89 lakh (8.9 million) shares. The floor price for these transactions was established at Rs 450 per share, representing a discount of approximately 3.5% compared to Monday's closing price. Jefferies was identified as the sole bookrunner overseeing the transaction.
Analyst Outlook on Honasa Consumer
These block deals took place amidst continued scrutiny and interest from various brokerage firms regarding the beauty and personal care company. Earlier in September, Equirus Securities reiterated a positive stance on Honasa, emphasizing that the company's recent advancements reflected improved operational execution rather than merely benefiting from a weak comparative base.
Equirus anticipates that Honasa's near-term growth will be bolstered by enhanced offline market penetration, a greater contribution from its core product categories, and the successful scaling of its newer brands. The brokerage highlighted Honasa's effective brand-building strategy, which involves identifying attractive market segments, developing flagship products, and efficiently scaling them to foster long-term growth.
Specifically, Equirus projects that Mamaearth will achieve a 10% Compound Annual Growth Rate (CAGR) after its strategic reset, while The Derma Co is expected to grow at a 20% CAGR, supported by product line extensions and an expanded offline presence. Furthermore, Honasa's portfolio of younger brands is collectively forecasted to grow at a 27% CAGR, albeit starting from a smaller base.
On the profitability front, Equirus forecasts a 314 basis point expansion in the company's EBITDA margin, reaching 13% by fiscal year 2029 (FY29E), primarily driven by optimized operating expenses. This improvement is expected to result in an enhanced Return on Equity (ROE) of 22% by FY29E. The brokerage initiated its coverage of Honasa with a 'Long' rating and set a December 2027 target price of Rs 595.
Broader market sentiment for Honasa Consumer indicates a 12-month Bloomberg consensus target price of Rs 559.25, implying approximately 20% upside from the prevailing price. While Atiqur Stock Broking issued a 'Buy' recommendation with a target of Rs 616 on September 21, JPMorgan maintained an 'Underweight' rating with a Rs 410 target on September 16.