Honasa Consumer Reports Strong Growth and Profitability in FY24

Honasa Consumer Ltd., the parent company of the well-known direct-to-consumer (D2C) brand MamaEarth, has announced robust financial results for the fiscal year ending March 2024 (FY24). The Gurugram-based firm achieved a significant 28.7% year-over-year increase in revenue, reaching nearly Rs 2,000 crore and approaching a major revenue milestone. Furthermore, Honasa Consumer posted a profit after tax (PAT) of Rs 110 crore in FY24, marking a significant turnaround compared to a loss exceeding Rs 100 crore in the previous fiscal year.

Revenue Growth and Profitability

Honasa Consumer’s financial statements, accessed from the Bombay Stock Exchange (BSE), reveal a strong performance. Revenues from operations climbed to Rs 1,920 crore in FY24, compared to Rs 1,492 crore in FY23. While there was a modest decline of 3.7% in revenue on a sequential basis, with Q4 FY24 showing Rs 471 crore compared to Rs 488 crore in Q3 FY24, the overall annual growth remains positive.

Financial Breakdown

The sale of beauty, personal care, and related products across various categories including skin care, hair care, and baby care constitutes the sole source of revenue for Honasa Consumer. Additionally, the company generated Rs 48 crore in interest and gains from financial assets, bringing its total revenue for FY24 to Rs 1,970 crore. While the exact breakdown of expenses was not disclosed, with marketing and advertising costs likely representing a significant portion, the cost of procuring materials accounted for 31.8% of the overall expenditure. Employee benefits, finance costs, depreciation, legal fees, transportation expenses, and other overhead costs contributed to a total expenditure of Rs 1,822 crore in FY24, compared to Rs 1,501 crore in FY23.

Profitability and Efficiency

Honasa Consumer’s successful management of revenue growth alongside controlled costs resulted in a noteworthy profit of Rs 110 crore in FY24, reversing a loss of Rs 151 crore in FY23. This turnaround is further reflected in improved return on capital employed (ROCE) and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, which reached 13% and 9.5%, respectively. Furthermore, the company achieved an improved cost-to-income ratio, spending approximately Rs 0.95 to earn every rupee in FY24.

Notes on Previous Performance

It is important to acknowledge that the substantial loss reported in FY23 (Rs 151 crore) was primarily attributed to a write-off of Honasa Consumer’s Rs 154 crore investment in Just4kids (Momspresso), an acquisition intended to expand the company’s content and influencer management capabilities.

Legal Matters

Honasa Consumer is also currently navigating a legal case in the UAE concerning certain distribution agreements with RSM General Trading LLC. The UAE court has ordered Honasa to pay Rs 57.6 crore plus interest in response to a Rs 100 crore damage claim filed by RSM General Trading LLC. Honasa Consumer is currently appealing this decision.