Mamaearth‘s parent company, Honasa Consumer reported its net profit increased seven times for the first 9 months. The PAT grew 264 per cent yoy in the Q3FY24. Ramanpreet Sohi, CFO of the beauty and personal care company, emphasised the importance of expanding faster than the industry by 2 to 2.5 times in the next year; targeting an incremental operating margin of 100 to 150 basis points year on year for the next two to three years, ensuring that bottomline growth is faster than the topline growth while continuing to be efficient.
“We intend to outgrow the industry by 2 to 2.5 times,” said Sohi discussing his growth plan for next year. The company’s margin grew at 7.1 per cent up 397 bps year on year, Sohi believes this is structural growth. ” As we scale younger brands efficiently, we are also scaling up. We intend to unlock 100- 150 bsp incremental operating margins year on year for the next two to three years. That will continue to unfold and ensure our bottom line growth and possibly topline growth,” he told ETCFO.
While the Q3 result was in expected lines and Honasa delivered a strong performance, the finance chief highlighted challenges in the short to medium term like concerns over softening demand. He said, “The rural stress is now seeming to play out in urban markets as well.” According to him, the Q3 festive season didn’t pan out as well for the e-commerce platforms, and the industry experienced a benign winter. This is putting pressure on larger incumbents and new-age companies in terms of volume growth.
The key levers of growth for Honasa Consumer are focus on distribution expansion, increasing distribution by 37 per cent YoY to 1.7 lakh retail touchpoints, especially on the offline side for Mamaearth. The Derma Co notably achieved an EBITDA positive status year-to-date, buoyed by hero products such as serums, sunscreens, and face wash. “Younger brands have scaled up while some leading the market in categories like sunscreen have exhibited strong market share growth,” said Sohi.
Focus Areas in FY 25
The focus area for the company in Q4FY24 and going into the next financial year is to further strengthen distribution. The company is planning to get the right partners on board. strengthening processes on the distribution side, and implementing a distribution management system. The company also continues to focus on right investments behind their brands to ensure capture the market shares by the next year, said Sohi.