With stellar Q1, Mamaearth parent signals recovery after distribution overhaul

Mint

3 days ago

After a challenging year spent overhauling its distribution model, Honasa Consumer Ltd, the parent of Mamaearth, has delivered its highest-ever quarterly revenue and profit. In the June quarter of FY26, Honasa's revenue rose to ₹ 595 crore and net profit to ₹ 41 crore, powered by double-digit growth in its core categories and fatter margins from quick commerce.
In Q1, Honasa reported its highest-ever quarterly revenue of ₹ 595 crore and a profit of ₹ 41 crore, with earnings before interest, taxes, depreciation, and amortization (Ebitda) margin improving sequentially to 7.7%. Focus categories, which account for over 80% of its revenue, saw a double-digit year-on-year growth.
Honasa's shares closed at ₹ 271on Tuesday. It is trading nearly 50% below its lifetime high of ₹ 547 hit in September last year.
The turnaround suggests the worst of last year's post-'Project Neev' slump is behind the company. With focus segments like face cleansers, shampoos, sunscreens, and baby care now contributing over 80% of sales, and offline reach crossing 9,000 stores, Honasa is betting that a sharper category strategy and faster fulfilment channels will keep its momentum intact.
The company expanded its offline distribution, increasing reach and visibility and continued to concentrate on select segments within core categories.
'In our offline stores, we aim to protect margins by focusing on carefully chosen categories with strong gross margins. These are selected to be market leaders, while evolving with customer needs, a reflection of our deliberate category strategy.' said Varun Alagh, co-founder and chief executive of Honasa, during a post-earnings call on Tuesday.
Mamaearth's sunscreen revenue was ₹ 595 crore, up 7.4% year-on-year and 11.6% sequentially, with growth affected by the early onset of the monsoon. Mamaearth's focus categories products are now available in over 9,000 stores.
The size of the sunscreen consumer cohort has risen to more than 50% of the segment. The category is projected to reach ₹ 5,000 crore in India by 2028, said Alagh.
The offline channel accounts for about 15% of Honasa's revenue, with distribution across more than 9,000 general trade outlets, including 3,400+ chemist stores, and over 2,500 modern trade outlets., reflecting a wider physical store penetration, alongside its presence in other channels.
However, quick commerce is delivering higher margins across all focus categories, including e-commerce. 'This is a very healthy sign, as any transition from other channels to quick commerce will be beneficial for us,' Alagh said.
Honasa Consumer has completed a year-long overhaul of its distribution model, shifting from super-stockists to direct distributors under 'Project Neev'. The move has doubled the contribution of direct distributors to 71% from 38% and expanded its network to over 100,000 distributors in FY25.
The transition led to operational challenges, strained distributor relationships, and cost the company about ₹ 70 crore in July–September, leading to a quarterly loss. While its Q4FY25 profit fell 17% to ₹ 25 crore, revenue grew 13% to ₹ 533 crore. The company plans to add 50,000 outlets to reach 150,000 direct distribution points next year.