Honasa Consumer Ltd., the parent company of Mamaearth, The Derma Co., and Aqualogica, has been making headlines in the stock market. But is it really worth your investment? Let’s break down its financials and uncover the truth!
📊 Key Financial Metrics
- Stock P/E: 88.8 ✅ (Highly Valued)
- Book Value: ₹35.5
- Dividend Yield: 0.00% ❌ (No dividends)
- ROCE (Return on Capital Employed): 17.1% ✅ (Decent profitability)
- ROE (Return on Equity): Data not available ❓
- EV/EBITDA: 46.2 (Expensive valuation)
- ROA (Return on Assets): 9.41%
- Net Profit Margin (Last Year): 6.86%
- Debt to Equity Ratio: 0.10 ✅ (Low debt)
- EPS (Earnings Per Share): ₹2.34
- Profit Growth: -3.06% ❌ (Declining profits)
- Quarterly Profit Variation: -140% ⚠ (Major concern!)
- 5-Year EPS Growth: 14.9% ✅ (Steady growth)
- Promoter Holding: 35%
🎯 What These Numbers Mean for Investors
🔄 Valuation & Expensiveness
Honasa Consumer is trading at a P/E ratio of 88.8, making it one of the most expensive stocks in its category. The EV/EBITDA of 46.2 also suggests that investors are paying a premium for its future growth expectations.
📈 Growth vs. Profitability – A Worrying Sign?
Despite a 14.9% EPS growth over 5 years, the quarterly profit drop of -140% raises red flags. Moreover, the profit growth of -3.06% suggests challenges in sustaining earnings.
🛠️ Financial Health & Stability
One positive aspect is its low debt-to-equity ratio of 0.10, indicating financial stability. The current ratio of 2.42 and quick ratio of 2.04 also suggest that the company can meet its short-term obligations comfortably.
💸 Dividend & Promoter Holding
- No Dividend Payout (0%): The company is reinvesting all profits into business growth rather than rewarding shareholders.
- Promoter Holding (35%): While not extremely high, it shows decent confidence from the founding team.
🤔 Should You Invest in Honasa Consumer?
✅ Buy if: You believe in long-term growth and are willing to hold despite short-term volatility. ❌ Avoid if: You prefer stable, profit-making companies with lower valuations.
⏳ Final Verdict: Honasa Consumer is currently overvalued, facing profitability concerns, but remains fundamentally strong with low debt and future growth potential. If you’re a high-risk investor, this stock may be worth tracking!
📈 What’s Your Take on Honasa Consumer? Drop your thoughts in the comments!
📢 Disclaimer: This article is for informational purposes only and not financial advice. Always do your own research before investing.
