Honasa Consumer Limited (HONASA) Q4 2026 Earnings Call Transcript

Good day, and welcome to Honasa Consumer Q4 and FY26 earnings conference call, hosted by J. Financial Institutional Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from JM Financials. Thank you, and over to you.

Good evening, everybody. Welcome to the 4QF526 earnings conference call of Honasa Consumer Limited. Today, on call, we have Mr. Varun Alag, co-founder, chairman, and chief executive officer, Ms. Ghazal Alag, co-founder and chief innovation officer, and Mr. Ramanpreet Suhi, chief financial officer. I now hand over the call to Mr. Varun for his opening remarks. Over to you, sir.

Hi, thank you.

Welcome, everyone, to the quarterly results call for UNASA, as you know, for Q4 and FI26. I'm here, joined with Gadur, Raman, and our team. We're going to start by just quickly taking you through the presentation that we've also uploaded along with the results, And then open the house for questions that you have for us. Starting with the presentation. The first section, as we always have been covering in our previous calls, is the future of Indian beauty and personal care space. And today, the insights that we're talking about is the inside-out beauty. Thank you. We believe there is a new trend that has been actively shaping both globally and in India, where consumers are looking for comprehensive solutions to their beauty problems, DH problems like hair fall, acne, etc. And to address these problems, apart from topical solutions, ingestible vitamins and supplements, which aid in correcting some of these problems at the core, is something that consumers have been seeking as a stronger solution to some of these problems. We are seeing this shape very well in India. We are watching this space, and we would also like to participate in this space over time. But that's an interesting insight that we wanted to present to you. Coming on to the financial snapshots, the update on Q4 and Phillyer for the business. I'm delighted to inform that Q4 FY26 has been a great quarter. I would say another great quarter, because this is the third consecutive quarter. We delivered 28% YY growth with EBITDA scaling almost two and a half times over last year's same quarter. Overall, 682 crores in quarterly revenue, 71.4% gross margin, which is expanded by 70 basis points, YY. EBITDA at 77 crores, which is 11.3%, with PAT at 69 crores, which is... This was 10.2%. Underlying volume growth has been strong. So this growth has actually been gdyby volume, I go to price. And we continue to be negative . So this growth includes a recent acquisition of BPM And this is a like-for-like growth, and the reported growth, of course, of course, of course. That we have been talking about over the last few quarters, where revenue recognition gets impacted, but not the bottom line, and we have shared those numbers as well. So if you correct for the basis, actually the growth remains same, but because just the base gets changed and the delivery gets changed, but the base doesn't, the reported growth looks relatively low. And that's it, the like-for-like growth model. I want to inform that this is the first main year for the company where the board has decided to reward shareholders with a dividend of what we see for equity share. This is about 50% of the fact that the company has generated for the full year, which is in excess of 200 crores. And the total cash payout will be about 98 crores as a part. And this just signals strength in our belief on the ongoing cash generation capability of the company. And even after deploying what we feel are relevant opportunities in an inorganic, given we are a negative working capital company, we will continue to And we would like to reward the shareholders by distributing its form of credit. And that, you know, the focus categories that we have chosen to. I'm also delighted to tell you that Mama continues to become stronger in terms of the consumer love is getting, which is visible In the growth as well, the brand has grown at mid-teens this quarter. The brand health is at multi-quarter high. The value market share across the core categories and SAH has gone consistently up. Even in terms of brand power index, which is measured through Gantash over the last three years, it's actually consistently gone up. This strategy has been working for us where our hero products are actually growing 2x faster than the brand, pointing to all our inputs coming together to fundamentally shape a better trajectory for the brand that we are far more confident of in future as well. To dominate growth, growing at almost 40% and with now the inclusion of Regina and Mende as well, which we required. Product superiority, innovation. and targeting have shown very strong results, and we continue to back them to help us win in the focus categories that we have defined. Dabup, of course, has been 20 years top forward for us. It has delivered strong growth again, maintaining double-digit. The face cleanser business has almost doubled. It's also now visible in GT market shares in Nielsen, almost 1% market share for Dermaco face washes as usual now, and we've been consistently working on formulations where all the core formulations are winning in line test for us, and Hero product contribution is already more than 50% of the brand and continues to grow. And it's its first quarter of consolidation, Reginald, the brand that we acquired, we've actually been able to integrate it fairly well and continue the strong momentum on the brand, and the brand has actually grown by a hundred percent plus and doubled its revenue while it has also crossed a hundred crore mark. Becoming the sixth brand in Manasa's portfolio to do so. We've also been able to unlock newer geographies like Maharashtra, we are strengthening the brand across, you know, other commerce channels, and we are doubling down on the distribution content for the brand. Looking back at overall FY26, this is a year where we have delivered 20% worldwide growth. Thank you. This was our internal agenda, and the team has come together and has been able to deliver it, and this is an area where we have tripled our EBITDAs, taking the full year EBITDA to about 9.3% EBITDA margin, keeping in line with the promise that we will continue to improve our EBITDAs by the June of about 100 basis points every year. Thank you very much, everyone, and welcome to the Q&A, and welcome to the Q&A, and welcome to the Q&A, Thank you. Thank you very much, everyone, and thank you very much, everyone, and thank you very much. Thank you. to generate much more diverse wider as well as Gen Z relevant content. Offline system. What the transition has done is the pain that we've gone through in this transition is paying off now. Brands like Dermacoast. And I'm not sure if I'm not sure if I have in all that we do cross categories continues to drive this agenda and continues to drive our branch to be more relevant than our consumers. So the six pillars... We have been able to deliver better than planned outcome for ourselves, and in line with our confidence as well as our confidence in our ability to... And we've also been sensing the talent within the organization. We have recently made a few new appointments, which includes Sahil, who's been CEO at multiple cosmetic and makeup companies, Dheeraj, who's been a founder of Nutraceuticals brand, Madhur, who's worked across EUH companies to build businesses and shape younger businesses, and we welcome them to the team. And we We will, you know, work with them on shaping the next horizon of the business for our Thank you. Right, which is outside the domain of our CSR. All of these actually contributions are part of our marketing. Our CSR regionals also continue to shape strongly. Our focus has been on clean air, urban greenery, and education for tomorrow. on shaping initiatives in the communities where we operate and around these three four I would like to thank you for listening in. Yes, I would love to answer the questions that you have for us.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Vivek from Jefferies, India. Please go ahead.

Hi, Varun and team. I hope I'm audible well. My first question is on the Mama Earth brand. So, look into FI27 and medium. I'm sorry, you're sounding muffled. Is it better now?

Yes, please go ahead.

Sorry. So just to repeat, Varun, Mama Earth brand, FI, you know, the recent quarter has done well. FI 27 and medium term, given the size of the brand as well as, you know, the penetration-led opportunity in the offline side, how do you think about this brand, you know, growing into the next year as well as from a three-year perspective?

Hi, Vivek. Thanks for asking that question.

So, we're fairly confident of delivering a double-digit CAGR on the brand from the next five years perspective. We see a lot of share gain opportunity across the focus categories that the brand has in face wash, shampoo, and other categories which are of Invest to us on the brand and we're investing in them. We also see distribution gain opportunities given the brand is only in 200,000 outlets and potentially can get to half a million outlets over the next three to five years. And I think a combination of those two makes us fairly confident that over the next five years, the brand should continue to grow at a double-digit tackle.

Okay, got it. That's very interesting. The second question. I'm sorry, it's getting muffled again. Can you repeat the question, please? Is it better now? Sorry.

Yes, yes, please repeat your question.

Apologies for this. So, Varun, the second question is on the focus categories. You know, you have had, you know, highlighted these six or seven categories that you will go after. And then, you know, then you entered into men's category, as well as you are, you know, you have spoken about nutraceutical. Do you think that, you know, again, these two initiatives will, you know, create a bit of complexity or the organization is robust enough to handle, you know, beyond what you have already articulated as the focus parts of the portfolio?

Um, so, I think I'd say two things. Firstly, the men's... Skin care is a proposition. The categories continue to be skin care, face wash, which are the core categories that are focused for us, led by sunscreens in Reginald specifically. So, it's the same category, for example, sunscreen, but now we have another, you know, way to capture some of that time which men are looking for within that same category. So, I would see that. You know, to answer the second question, honestly, I think, you know, Teams on the top. Chances and constraints to... I took my career from a leader called Miles Babu Hilton, who is a blind man of 70 years and has run marathons across deserts and has not let his blindness come in his way of achieving the dreams that he had set for himself. And the one thing that he stated in that conference 15 years ago was... The fact that the only limits that exist for us are the ones that we choose to accept, and I think I was very moved by that, and that has been, you know, my operating philosophy, and hence, if I believe there is a dream that we have as an organization, there's an opportunity that we want to go after as an organization, I would rather build that out. And if there is, you know, probably worry of profitability in the way, then I would want to build all of those profitably very early on itself. We want to ensure that the opportunities that we see and that we believe we can capture, we would want to continue to go after them, and we are building a robust organization and, you know, the right kind of playbooks to ensure we are able to execute them.

Got it, and genuinely like the growth mindset. The last question is, and apologies if it's direct or unfair question, but I mean, over the quarter that I have seen your commentary and the presentation drift for TDC versus Aqualogica, I mean, this is my feeling, and correct me if I'm wrong or if you want to add anything, but it looks like TDC has actually performed far better than probably what you would have thought, and Aqualogica has been a bit under. One, is that observation correct? And if yes or no, can you give your reasons and some backdrop to especially the Equalogica brand?

I think on TDC specifically,

that's the second brand that we started after Mama, and that is the brand where we want to take it to a thousand crores and become probably the only company in the last couple of decades. We have crafted 2,000 crore-plus brands in this country from scratch, and hence we have been actively sharing a lot more detailed progress on Domoco as a brand. It is also, of course, benefited from being in the active segments that we recognized at the right time, whereby by executing it right and by, you know, finding the right kind of fundamentals, whatever we had learned on MAMA, executing that. We've actually been able to scale that brand very strongly, which is why we specifically double down and talk about that because that's where we want to show our replicability of our playbooks and our ability to build another thousand-per-a-odd brand. Rest, all the brands are actually much younger. Ecologica is two years later than Dermaco, actually two and a half in terms of its birth year and month, and hence they are actually years apart in terms of their progression as well. So on the rest of the brands, we provide a combined view. Each of the brands have their own trajectories. Every year, we have new learnings around how to... Make them sharper. And the overall strategy of the company... for different kind of sharp propositions. And depending upon how consumer sentiments change, It's towards pop hydration, or it's towards actives. We will change our investment gears and make sure we are able to leverage on those consumer sentiments using the right brand chassis. If it is right now a strong tailwind on actives, we are doubling out on Dermaco and sort of getting a strong share with that. As in when, you know, Acalogica becomes also, then we would want to share more around that. We will keep bringing... Those updates to you as well.

Vivek, does that answer your question?

Since there is no response, we'll move on to the next question. Before we do that, ladies and gentlemen, to ask a question, please press star and one on your phone. Next question is from the line of Manoj Menon from ICICI Securities. Please go ahead.

Hi, team. Good evening. I have only one small clarification, which is essentially the overall growth, which has been absolutely top of the line and very, very impressive. How much is the growth driven by the core businesses and the newer, let's say,

SKUs or products which have launched?

Let's say, put it this way, right? So, let's say, how much of the growth is driven by the product which would have launched in the last one year versus which existed previously?

Thank you. So, if we look at just the products

launched in last one year, Manoj, that growth would be to the tune of about 7% to 8%. I mean, now we've also started to look at our innovations more from a three-year horizon than one-year horizon because it's unfair to see and, you know, leave innovations in just one year. Because most of the innovations that we are sort of focusing on, especially since last one year, are innovations where we want to enter a certain partition and actually structurally take share over time in that partition. So I think, you know, and we could probably, you know, from next time share a slightly medium-term number around innovation trend line as well. But just from the calendar year perspective, that will be the opportunity.

Yeah, that's loud and clear. Secondly, just about regional men, whatever we can talk in a public platform about, you know, let's say it's been a few months, maybe five months now, right, already, you know, so let's say what's your initial take and where do you think the brand could be, not necessarily numbers, right, and what are the qualitative aspects. The reason I'm asking because just as a consumer, when I'm searching to buy the brand, for example, I couldn't find the brand, let's say, in a platform like Nikao. So that is a common observation that probably there are a lot of low-hanging

fruit, you know, to be executed here.

So just a bit of development and your mediums and aspirations in the brand. Thank you.

Yeah, Sean, so honestly, I agree with your observation that we know that the brand has multiple This is to actually grow on, and which is what we feel it's made us sort of, you know, attracted towards the brand itself. One axis of growth is distribution, which, like you rightly pointed out, and we also mentioned, we're just about further extending distributions on the brand this quarter. So probably by next time when we meet, you will be able to find the brand on the platforms that you're looking for. We have done all of that basic work, and now it's just about, you know, POs and replication and then scale-up of that distribution, right? So that is one axis on which we see the brand growing. The second axis of brand growth is just category expansion. It was largely a sunscreen brand, 98%, when we bought it. And we are further unlocking newer categories based on our R&D information as well as consumer insight understanding. So we see categories like face washers, serums, to also become categories of future for the brand. So that's the other axis on which the brand will grow. And the third axis is the geography axis. The brand, like we mentioned, was largely a South India-focused brand, and now slowly we are coming up, you know, on that map with opening up of Maharashtra and then focusing on other states in future. So I'm pretty confident that with those three axes and potentials of growth, the brand should continue to grow well over the next three to five years.

Thank you. And one last thing, if I may, I know it's very granular, you know, but still, let me attempt. So the growth in MAMAC is very impressive in fields. Is online also growing very well or is largely heavily being done by offline? Yes, online is also double-digit growth.

Super.

Thank you. Thank you and good luck.

So, MAMARTH online also is double-digit growth.

Thank you. We'll take our next question from the line of Umang Shah from Banyan 3 Advisors PMS. Please go ahead.

Hi, sir. Thank you for the opportunity. I just had one observation. Our advertising expenses have grown at 6% off for the full year, while other expenses actually declined. I just wanted to understand what led to the two, and going forward, how do we balance between margins and sales growth? I just wanted to understand in terms of reinvesting in the brand or in terms of expanding distribution. Thank you.

So, in general, advertising as a... Value spend, you know, is something that we've talked about will go up, but as percentage, it comes down, and hence, that's the A&P leverage that we see getting generated in the business, and we've seen that unlocking value for us and EBITDA for us last year as well. There are, you know, three key sort of, you know, buckets for us, right, from a leverage generation perspective, right, you know, one are channel spends and performance spends, second is our brand spends, and third is our OPEX spends, right, you know, and combination of leverage from these three is what will help us generate that 100 basis point improvement in EBITDA profile that we have talked about, right, you know, From, you know, year on year, over the next five years perspective, our internal plan is to make sure even from here, in five years, we are able to improve 500 basis points on our bottom line, and the combination of these three levers will help us do that. The weightage between those might vary between years. Some year, we might focus on channel spend, some year on RAN spend, some year on OPEX to get to that expansion. But we are fairly confident of delivering our high-teens CAGR over the next five years that we've talked about, along with this 500 basis points EBITDA expansion. Thank you.

Great, sir. And, sir, any reasons for declining the other expenses, portfolio and for Q4?

Yeah, hi, Raman, this is right. So I think, you know, when you look at Q4 and of course even year on year, there is what we mentioned during the initial part of our conversation and presentation is the, it's not like for like because the reported numbers are, you know, are taking the impact of flip cart settlement and the GT charges that, you know, have reduced our realization and also the expenses or distribution expenses that they should, these charges have also gone out of So, the other expenses are about 15% for Q4 are actually around 18%. And last year, we have about 22% same quarter. So, the CRM quarter's reduction is largely due to the leverage or the scale benefits and everything. But apart from that, it's more for life-for-life.

Sure, sir. Thank you so much and all the best.

Thank you. Next question is from the line of Nitin from HDFC Securities. Please go ahead.

Hi, thanks for taking my question and congrats for good recovery. My first question is around like how are you placed with inflation and thoughts around high side?

Could you repeat that question?

Thoughts around me? Did not understand the last part of that question.

Hello.

Yeah, we can hear you better now.

Yeah, so I was asking like, how are we placed with inflation and plans for price hikes?

Thank you. The crude impact and the war scenario to impact some of the PM and RM prices for our portfolio. And in line with that, we have already executed some calibrated price increases in line with where we've also seen competition taking the price increase in the same, I mean, our RPI is still remaining fairly competitive at the premium that we want to maintain. And those have already been... I'm sort of executed as we speak in Q1. So we don't, we don't impact at least at this point. Who is at this point? Thank you. Concentration that is coming.

Yeah, thanks for the answer. Would you be able to quantify the quantum of Tricyte?

Not really.

Sure, no problem. And with respect to actives, like, just wanted to check, like, how we are placed compared to a bigger competition like HUL, so which is placing minimally, aggressively in the offline channel.

Um, I would just say that Dermaco continues to be, you know, grow really fast. In our view, it's a larger brand. And in fact, even according to Euromonitor data, it is the largest active brand in the country. And even according to Nielsen, Dermaco shares are the highest amongst any other active brand in the country. So I think we're well positioned.

And how is the error now for the TDC brand?

Yeah, we, last week they closed, it was at 750 crores, plus it

continues to grow on from there.

Okay, thank you. And the last question pertains to, like, I just wanted to have a sense on, like, how big is the GT sort of revenue for us for FI26? And any thoughts around, like, how we want to grow this channel? Because lots of action we have taken, and it has started sort of helping us grow faster. So that's the last question.

Yeah, so this channel continues to be one of our fastest-growing channels now, and fundamental inputs including right manpower, right distribution partners, covering the right kind of stores, tracking execution at store level, and ensuring quality of distribution and automatic, you know, ordering sort of systems. So, a combination of all of those levers is what we have deployed, which makes us feel confident that we will continue to win in the current outlets that we are presenting and also continue to add newer outlets, which has been our active agenda.

Sure. Thank you. Thanks a lot and all the very best.

Thank you.

Thank you. Next question is from the line of Mehul Desai from JM Financial. Please go ahead.

Yeah. I just wanted to know the life for life growth if you remove Reginald from sales as well as EBITDA. I mean, how would the core business growth look on sales and EBITDA for the quarter?

So, from a growth perspective, 21% will be the like-for-like growth, and from an EBITDA perspective, the impact will be just about 30 basis points, rest all EBITDAs of the code.

And this 21%, you are removing the Flipkart impact also, right? No, Flipkart impact will need to further remove, which is why I mentioned it's like-to-like.

Okay. If you remove some cut impact, then it's not like for like.

Okay. And when you say this 40% growth for your younger brand, obviously, this includes Reginald also. I mean, excluding Reginald also, I mean, I think newer brands would have seen an acceleration by younger brands in this quarter. Yes, they are at 28% plus. 28% plus. And lastly, I mean, while you did allude to Mama's vote for the quarter, can you give some flavor on what was the Mama's vote for the full year, FY26?

So, for the full year, also, it's in double-digit range.

Oh, got it. Thank you, Mohan. That's all for me.

Thank you. Ladies and gentlemen, to ask a question, please press star and run on your phone. We'll take our next question from the line of Yogita from Aritya Birla Capital. Please go ahead. Yogita, please go ahead with your question.

Yeah, hi. Congratulations on the good set of numbers.

Can I use your handset mode, please? Yogita, please use your handset mode. Your audio is not clear.

Can I audite?

Yes, please go ahead.

Yeah, congratulations on the good side of numbers. So, can you give some strategy, your strategy on driving premiumization in skincare and healthcare, and how are we expecting this to impact growth and margins going forward?

So, honestly, our underlying hypothesis around all our brands has been premiumization. We exist because we felt that the emerging middle class of the country was not being served with differentiated, more aspirational brand propositions, which makes them feel like they're moving forward in life and upward in life. And hence, all the business that we have built has been by tapping on the premiumization trend. And we expect this premiumization trend to continue for decades to come.

Okay, understood. Another question, can you give some color on, you know, margin performance across a few brands, core brands, Mama, Dama, Co, and others, like your performance in FY26 and maybe some guidance for FY27?

So, from a margin standpoint, Mamat and Dermoco both are double-digit EBITDA positive now, and we foresee them to continue improving their margin trajectory in future as they have done in the past, right, along with growth. And from a forward-looking outcome, like we said, I mean, from the next five years' perspective, the company plans to grow at a high-teams CAGR. There would be years where we do a few points better than that and years where we'll do a few points more. But overall, we'll grow at a high-teams CAGR from a next five years' perspective. Effort would be to, of course, even do better than that. And from an EBITDA profile perspective, over the next five years, we want to get 500 basis points better. Again, there might be years where we'll do better than that in terms of the 100 basis points per year, depending upon the strategy. Last year was a strategy that will be delivered higher than that sort of benchmark, but overall the plan will be over five years, increasing at least 500 basis plans in one time.

Okay. Just one more question. The young brand and focus categories, how have you seen the growth for this year and quarter? So do we expect to, should we expect to continue driving at similar levels in F527?

We expect the young brands to continue to grow strongly and drive growth for the company in the next year as well. The levels, et cetera, you know, will keep changing. Like I said, we are more aligned to the broader goals and numbers that we talked about. But yes, some of young brands will continue to drive stronger growth for the company and drive growth for the company.

And about focus categories.

Again, yes, focus categories are getting more than 90% of our investment in focus, and hence we expect them to continue to be growth drivers for the organization.

Okay, got it. Thanks a lot. Thank you. Thank you. Next question is from the line of Aditya Liddhar from Stallion Asset. Please go ahead.

Yeah, my questions have been answered. Thank you.

Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to management for closing comments. Over to you.

Thank you so much for asking those questions. It was a pleasure speaking to all of you. We will see you in the next quarter with hopefully even benefit of regards. Thank you.

Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.