Mamaearth parent's profit up 63% YoY in Q1 as revenue growth slows

Honasa Consumer Limited, the parent company of popular brands like Mamaearth, The Derma Co, Aqualogica, Dr Sheth’s, and BBlunt, clocked a 63% year-on-year (YoY) rise in net profit for April-June 2024 quarter.

The house of brands clocked a net profit of Rs 40.26 crore in Q1 FY25 compared with Rs 24.7 crore during the comparable period last year, the filings with the BSE showed.

It also logged a 19% rise in its operating revenue to Rs 554 crore from Rs 464 crore in Q1 FY24. For the January-March 2024 quarter, it had logged a revenue growth of 21% YoY.

Its expenses in the quarter jumped 17% YoY to Rs 520.3 crore led by other expenses and purchase of traded goods.

The omnichannel beauty and personal care (BPC) player reported earnings before interest, tax, amortisation, and depreciation (EBITDA) margin of 8.3% in Q1 FY25, which was 8.3% higher on a YoY basis on the back of improving gross profit margins and scale-led efficiencies.

"The effectiveness of Mamaearth's distribution strategy is evident in its expansion to nearly 2 lakh FMCG retail outlets across India by June 2024, marking a 30% increase from the previous year," it said in the filing.

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The company, in the earnings call for the previous fiscal quarter, highlighted its plans to shift from a super stockist distribution model to direct distributors to expedite its omnichannel plans and tap on its multi-brand strategy. 

“Transitioning to direct distributorship in the top 50 cities has allowed us to improve retailer connections and in-store execution. This strategy not only drives cost efficiencies but also strengthens our long-term partnerships with Tier I distributors,” said Varun Alagh, Co-founder and CEO, Honasa Consumer, in its annual report. 

The company also announced that it has discontinued its Ayurvedic Beauty Products brand Ayuga as it couldn't establish a product-market fit for the vertical and saw slow traction. It also launched ‘Skin Renew by Dr. V’—a new premium brand under Derma Co.

"Our focus on a data-driven, consumer-centric strategy has led to a remarkable 9% contribution from new products to our revenue, while our partnerships, like with Dr Vanita Rattan to launch ‘Skin Renew by Dr. V’ range in The Derma Co, are enhancing our premium positioning in the actives category," noted Varun Alagh, Chairman and CEO, Honasa Consumer in its earnings statement.

Its skincare product line, The Derma Co, is expected to touch an annualised revenue run rate (ARR) of Rs 1,000 crore in the next 3-5 years, it said in its annual report.

Shares of the company closed 4.70% lower at Rs 473 apiece on the NSE on Friday.

(The story has been updated to reflect additional details.)