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Investing.com - CLSA has upgraded Honasa Consumer Ltd (HONASA:IN) from Hold to Outperform and raised its price target to INR333.00 from INR303.00, citing an improved margin outlook.
Honasa reported first-quarter fiscal year 2026 revenue growth of 7.4% year-over-year, in line with CLSA’s estimates and consensus. The company achieved underlying volume growth of 10.5% year-over-year, though growth was impacted by lower sunscreen sales due to an early monsoon onset, which had approximately 200 basis points impact.
The company’s EBITDA margin expanded 264 basis points sequentially to 7.7%, resulting in EBITDA figures that beat CLSA’s estimates by 47% and consensus estimates by 44%. Management has provided guidance for approximately 7% EBITDA margin for fiscal year 2026, with 100-150 basis points expansion projected each year for the next four to five years.
CLSA has raised its fiscal years 2026-2028 earnings estimates for Honasa by 15-26% to reflect the improved margin outlook. The new price target of INR333.00 represents a 24% upside potential from current levels.
The upgrade from Hold to Outperform reflects CLSA’s increased confidence in Honasa’s profitability trajectory following the strong margin performance and management’s positive guidance for continued expansion.
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