Good evening everybody. Welcome to the 4Q FY26 Earnings Conference Call of Honasa Consumer Limited.

Today on call, we have Mr. Varun Alagh, Co-Founder, Chairman & Chief Executive Officer; Ms.

Ghazal Alagh, Co-Founder and Chief Innovation Officer; and Mr. Raman Sohi, Chief Financial Officer.

I now hand over the call to Mr. Varun for his opening remarks.

Over to you, sir.

Hi, thank you. Welcome everyone to the quarterly results call for Honasa Consumer for Q4 and FY26.

I'm here joined with Ghazal, Raman, and our team. We're going to start by just quickly taking you through the presentation that we've also uploaded along with the results, and then open the house for questions that you have for us.

Starting with the presentation, the first section as we always have been covering in our previous calls is the future of Indian beauty and personal care space. Today the insight that we're talking about is the inside-out beauty.

We believe there is a new trend that has been actively shaping both globally and in India, where consumers are looking for comprehensive solutions to their beauty problems, be it problems like hair fall, acne, etc. To address these problems, apart from topical solutions, ingestible vitamins and supplements which aid in correcting some of these problems at the core is something that consumers have been seeking as a stronger solution to some of these problems.

We're seeing this shape really well in India, we're watching this space, and we would also like to participate in this space over time. That's an interesting insight that we wanted to present to you.

Coming on to the financial snapshot, the update on Q4 and full year for the business, I am delighted to inform that Q4 FY26 has been a great quarter. I would say another great quarter because this is the third consecutive quarter of 20%+ growth for the company.

We've delivered 28% year-on-year growth with EBITDA scaling almost two and a half times over last year same quarter; overall, ₹682 crore in quarterly revenue; 71.4% gross margin, which has expanded by 70 basis points year-on-year; EBITDA at ₹77 crore, which is 11.3%; PAT at ₹69 crore, which is 10.2%. Underlying volume growth has been strong, this growth has actually been driven by volume and not just price.

We continue to be negative working capital. Just to call out, this growth includes our recent acquisition of BTM Ventures as well, and this is a like-for-like growth.

The reported growth of course contains the Flipkart adjustment that we have been talking about over the last few quarters, where revenue recognition gets impacted, but not the bottom line, and we've shared those numbers as well. If you correct for the basis, actually the growth remains same, but because the delivery gets changed but the base doesn't, the reported growth looks relatively lower.

That said, the like-for-like growth for the business is at 28%. We're also delighted to inform that this is the first main year for the company where the board has decided to reward shareholders with a dividend of ₹3 per equity share.

This is about 50% of the PAT that the company has generated for the full year, which is in excess of ₹200 crore. The total cash payout will be about ₹98 crore as a part of this dividend.

This just signals strength in our belief on the ongoing cash generation capability of the company, and even after deploying what we feel are relevant opportunities in inorganic, given we are a negative working capital company, we will continue to generate excess cash and we would like to reward shareholders by distributing in form of dividends. Coming to the core business highlights, I'm again elated to inform that the focused categories that we've chosen to double down on continue to actually drive growth for the company.

They have grown by 35% year-on-year. Contribution of focused categories has increased 500 basis points in one year.

All the channels are growing strongly in our focus categories, right? This strategy clearly has paid off.

I'm also delighted to tell you that Mamaearth continues to become stronger in terms of the consumer love it's getting, which is visible in the growth as well. The brand has grown at mid-teens this quarter.

The brand health is at multi-quarter high. The value market share across the core categories and SH has gone consistently up, even in terms of Brand Power index which is measured through Kantar.

Over the last 3 years, it's actually consistently gone up. The hero product strategy has been working for us, where our hero products are actually growing 2x faster than the brand, pointing to all our inputs coming together to fundamentally shape a better trajectory for the brand that we are far more confident of in future as well.

Younger brands, of course, continue to dominate growth, right, growing at almost 40%, with now the inclusion of Reginald Men as well, which we've acquired. All the brands with strong focus on product superiority, innovation, and sharp consumer cohorts and targeting have shown very strong results, and we continue to back them to help us win in the focus categories that we have defined.

The Derma Co, of course, has been continuous top performer for us. It has delivered strong growth again, maintaining double-digit EBITDA.

The face cleanser business has almost doubled for the brand in terms of growth. It's also now visible in GT market shares in Nielsen, almost 1% market share for The Derma Co face washes as well now.

We've been consistently working on formulations where all the core formulations are winning in blind tests for us, and hero product contribution is already more than 50% of the brand and continues to grow. All in all, a pretty phenomenal performance on Derma Co as well.

In its first quarter of consolidation, Reginald, the brand that we acquired, we've actually been able to integrate it fairly well and continue the strong momentum on the brand. The brand has actually grown by 100%+ and doubled its revenue year-on-year.

It has also crossed ₹100 crore ARR mark, becoming the sixth brand in Honasa's portfolio to do so. Honasa now has more than six brands with 100+ crore ARR trajectories.

We've also been able to unlock newer geographies like Maharashtra. We're strengthening the brand across other commerce channels, and we're doubling down on aspirational content for the brand as we speak.

Looking back at overall FY26, this is a year where we have delivered 20% year-on-year growth. This was our internal agenda, and the team has come together and has been able to deliver it.

This has been a year where we have tripled our EBITDAs, taking the full-year EBITDA to about 9.3% EBITDA margin, keeping in line with the promise that we will continue to improve our EBITDAs by the tune of about 100 basis points every year. Our gross profit margins continue to be healthy for the overall year.

Our growth has been volume-driven, which is reflected in our UVG, and we've delivered ₹200 crore PAT for the full year this year. All of this is basically combination of the fundamental levers that we have talked about in the past as well: focus category strategy, focus on product superiority in all our core partitions, focusing on hero product scaling, especially in focus brands where GT and MT is a core sort of channel, sharpening our content engine to generate much more diverse, wider, as well as Gen Z relevant content, a much more stabilized offline system.

All the hard work that the team has done and the pain that sort of we've gone through in this transition is paying off now with a very strong and satisfied distribution ecosystem in the top 100 cities. Direct distributors' stocks are also optimized at between 25 to 30 days.

This distribution system is helping us drive our other brands like Derma Co also in GT. Of course, our core DNA of being more innovative in all that we do across categories continues to drive this agenda and continues to drive our brands to be more relevant to our consumers.

These six pillars have been core to how we have been able to deliver better than planned outcome for ourselves. In line with our confidence as well as our confidence in our ability to take share and craft brands, we've also been strengthening the talent within the organization for us to be able to focus on and build more businesses in the decade to come.

We have recently made a few new appointments, which include Sahil, who's been CEO at multiple cosmetic and makeup companies; Dheeraj, who's been a founder of a nutraceuticals brand; Mathur, who's worked across new-age companies to build businesses and shape younger businesses. We welcome them to the team, and we will work with them on shaping the next horizon of businesses for Honasa as well.

We continue to contribute to our communities as our brands scale up with the initiatives that each brands have. Apart from what our brands do, which is outside the domain of our CSR, all of these actually contributions are part of our marketing spends.

Our CSR agendas also continue to shape strongly. Our focus has been on clean air, urban greenery, and education for tomorrow, and we're continuously focusing on shaping initiatives in the communities where we operate around these three focus areas.

With that, I would like to thank you for listening in on the update that we had to share. Would love to answer the questions that you have for us.

Hi Varun and team. I hope I'm audible well.

My first question is on the Mamaearth brand. So, [unclear] this quarter, if I look into FY27 and medium term, both—

Is it better now?

Sorry. Just to repeat, Varun, Mamaearth brand, the recent quarter has done well.

FY27 and medium term, given the size of the brand as well as the penetration-led opportunity in the offline side, how do you think about this brand growing into the next year as well as from a three-year perspective?

Hi Vivek, thanks for asking that question. We're fairly confident of delivering a double-digit CAGR on the brand from the next 5 years perspective.

We see a lot of share gain opportunity across the focus categories that the brand has in face wash, shampoo, and other categories which are of interest to us on the brand, and we're investing in them. We also see distribution gain opportunities given the brand is only in 200,000 outlets, and potentially can get to half a million outlets over the next 3 to 5 years.

I think combination of those two makes us fairly feel confident that over the next 5 years, the brand should continue to grow at a double-digit CAGR.

Got it. That's very interesting.

The second [unclear] on the focus categories—

I'm sorry. Is it better?

Is it better now? Sorry.

Apologies for this. Varun, the second question is on the focus categories.

You have had highlighted these six or seven categories that you will go after, and then you entered into men's category as well as you have spoken about nutraceuticals. Do you think that again these two initiatives will create a bit of complexity, or the organization is robust enough to handle beyond what you have already articulated as the focused parts of the portfolio?

Vivek, I think I'd say two things. Firstly, the men's skin care is a proposition.

The categories continue to be skin care, face wash, which are the core categories that are focus for us, led by sunscreens in Reginald specifically. It's the same category, for example sunscreen, but now we have another way to capture some of that TAM which men are looking for within that same category.

I would see that into like this. To answer the second question, honestly, I think I would like to state, and probably I'll take a minute to answer that question, I think you will need to understand that philosophically, we're a team and I'm a person who believes in keeping my goals and dreams on the top, and changing the circumstances and constraints to achieve those goals.

I heard this very young in my career from a leader called Miles Hilton-Barber, who was a blind man of 70 years, and has run marathons across deserts and has not let his blindness come in his way of achieving the dreams that he had set for himself. The one thing that he stated in that conference 15 years ago was the fact that the only limits that exist for us are the ones that we choose to accept.

I think I was fairly moved by that, and that has been my operating philosophy. Hence, if I believe there is a dream that we have as an organization, there's an opportunity that we want to go after as an organization, we would want to put that up front, and we would want to shape our organization to go after those opportunities.

Which is why, if there are right manpower, right talent, which is required to go after some of these new categories, I would rather build that out. If there is probably worry of profitability coming in the way, then I would want to build all of those profitably very early on itself.

I would want to make sure that the opportunities that we see and that we believe we can capture, we would want to continue to go after them. We are building a robust organization and the right kind of playbooks to ensure we're able to execute on the same.

Got it, and genuinely like the growth mindset. The last question is, and apologies if it's direct or unfair question, but over the quarters that I have seen your commentary and the presentation drift for TDC versus Aqualogica, this is my feeling, and correct me if I'm wrong or if you want to add anything, but it looks like TDC has actually performed far better than probably what you would have thought, and Aqualogica has been a bit under.

One, is that observation correct? If yes or no, can you give your reasons and some backdrop to especially the Aqualogica brand?

Vivek, I think on TDC specifically, that's the second brand that we started after Mamaearth. That is the brand where we want to take it to ₹1,000 crore, and become probably the only company in the last couple of decades who is crafted two ₹1,000 crore+ brands in this country right from scratch.

Hence, we have been actively sharing a lot more detailed progress on The Derma Co as a brand. It has also, of course, benefited from being in the active segment that we recognized at the right time, whereby by executing it right and by finding the right kind of fundamentals, whatever we had learned on Mamaearth executing that, we've actually been able to scale that brand very strongly.

Which is why we specifically double down and talk about that because that's where we want to show our replicability of our playbooks and our ability to build another ₹1,000 crore brand. Rest, all the brands are actually much younger.

Aqualogica is 2 years later than Derma Co, actually two and a half in terms of its birth year and month. Hence, they're actually years apart in terms of their progression as well.

On rest of the brands, we provide a combined view. Each of the brands have their own trajectories.

Every year we have new learnings around how to make them sharper, and the overall strategy of the company has been to have horses for courses, right, different brands which have and stand for different kind of sharp propositions. Depending upon how consumer sentiments change, either it's naturals or it's towards pop hydration or it's towards actives, we will change our investment gears and make sure we are able to leverage on those consumer sentiments using the right brand chassis.

If it is right now a strong tailwind on actives, we are doubling down on Derma Co and sort of gaining strong share with that. As and when Aqualogica becomes also then material enough and we would want to share more around that, we will keep bringing those updates to you as well.

Hi team, good evening. I have the one small clarification, which is, obviously, the overall growth which has been absolutely top-of-the-line and very, very impressive.

How much is the growth driven by the core businesses and the newer, let's say, SKUs or product which have launched? Let's say, put it this way, right?

Let's say how much of the growth is driven by the product which would have launched in the last 1 year versus which existed previously? Thank you.

If you look at just the products launched in last 1 year, Manoj, that growth would be to the tune of about 7% to 8%. Now we've also started to look at our innovations more from a 3-year horizon than 1-year horizon because it's unfair to see and leave innovations in just 1 year, because most of the innovations that we are sort of focusing on, especially since last 1 year, are innovations where we want to enter a certain partition and actually structurally take share over time in that partition.

I think and we could probably from next time share a slightly medium-term number around innovation trend line as well. Just from the calendar year perspective, that'll be there.

Sure. No, that's loud and clear.

Secondly, Varun, just about Reginald Men, whatever you can talk in a public platform about, let's say it's been a few months, maybe 5 months now, right, already. Let's say what's your initial take and where do you think the brand could be, not necessarily numbers, right, and what are the qualitative aspects?

The reason I'm asking because just as a consumer when I was searching to buy the brand, for example, I couldn't find the brand, let's say, in a platform like Nykaa. That is a common observation that probably there are a lot of low-hanging fruits to be executed here.

Just a bit on Reginald Men and your medium-term aspirations in the brand. Thank you.

Sure, Manoj. Honestly, I agree with your observation that we know that the brand has multiple axes to actually grow on.

Which is what we feel made us sort of attracted towards the brand itself. One axis of growth is distribution, which like you rightly pointed out and we also mentioned, we're just about further extending distributions on the brand this quarter.

Probably by next time when we meet, you will be able to find the brand on the platforms that you're looking for. We have done all of that basic work and now it's just about POs and replication and then scale-up of that distribution.

That is one axis on which we see the brand growing. The second axis of brand growth is just category expansion.

It was largely a sunscreen brand, 98% when we bought it. We are further unlocking newer categories based on our R&D and formulations, as well as consumer inside understanding.

We see categories like face washes, right, serums, to also become categories of future for the brand. That's the other axis on which the brand will grow.

The third axis is the geography axis. The brand, like we mentioned, was largely a South India-focused brand, and now slowly we are coming up on that map with opening up of Maharashtra and then focusing on other states in future.

Feeling pretty confident that with those three axes and potentials of growth, the brand should continue to grow well over the next 3 to 5 years for sure.

Thank you. One last thing if I may, I know it's very granular, but still let me attempt.

The growth in Mamaearth is very impressive in teens. Is online also growing very well, or it's largely heavily been done by offline?

Yes, online is also double-digit.

Double-digit. Okay.

Mamaearth online also is double-digit growth.

Perfect.

Hi sir. Thank you for the opportunity.

Just had one observation: our advertising expenses have grown at 6% odd for the full year, while other expenses have actually declined. Just wanted to understand what led to the two, and going forward, how do we balance between margins and sales growth?

Just had wanted to understand in terms of reinvesting in the brand or in terms of expanding distribution. Thank you.

In general, advertising as a value spend is something that we have talked about will go up, but as percentage, it comes down and hence that's the A&P leverage that we see getting generated in the business, and we've seen that unlocking value for us and EBITDA for us last year as well. There are three key sort of buckets for us from a leverage generation perspective: one are channel spends and performance spends, second's our brand spends, and third is our opex spends.

Combination of leverage from these three is what will help us generate that 100 basis points improvement in EBITDA profile that we have talked about from a year-on-year over the next 5 years perspective. Our internal plan is to make sure even from here in 5 years we're able to improve 500 basis points on our bottom line.

The combination of these three levers will help us do that. The weightage between those might vary between years.

Some year we might focus on channel spends, some year on brand spends, some year on opex to get to that expansion. We're fairly confident of delivering our high-teens CAGR over the next 5 years that we've talked about, along with this 500 basis points EBITDA expansion in the same period.

Great sir. Sir, any reasons for decline in the other expenses for full year and for Q4?

Hi Umang, Raman this side. I think, when you look at Q4 and of course even year-on-year, what we mentioned during the initial part of our conversation and presentation is it's not like-for-like because the reported numbers are taking the impact of Flipkart settlement and the GT charges that have reduced our realization and also the expenses, the distribution expenses that they used to charge has also gone out of our P&L.

The other expenses that you see at

about

15% for Q4 are actually around 18%, and last year were about 22% same quarter. The 300-400 bps reduction is largely due to the leverage, the scale benefit that we're seeing, but apart from that it's not like-for-like.

Sure, sir. Thank you so much, and all the best.

Thank you.

Hi. Thanks for taking my question, and congrats for good recovery.

My first question is around how are you placed with the inflation and thoughts around price hikes?

Could you repeat that question? Thoughts around?

Did not understand the last part of that question.

Hello.

We can hear you better now.

Yeah. I was asking how are we placed with inflation and plans for price hikes?

We did foresee the crude impact and the war scenario to impact some of the PM and RM prices for our portfolio, and in line with that, we have already executed some calibrated price increases in line with where we've also seen competition taking the price increase the same, and our RPI is still remaining fairly competitive at the premium that we want to maintain. Those have already been sort of executed as we speak in Q1.

At least at this point of time with where crude is at this point of time, we don't expect any further price increases, but what we have already done should take care of the COGS inflation that is coming in.

Thanks for the answer. Would you be able to quantify the quantum of price hike?

Not really.

Sure, no problem. With respect to actives, just wanted to check how we are placed compared to bigger competition like HUL, which is placing Minimalist aggressively in the offline channel?

I would just say that Derma Co continues to grow really fast. In our view, it's a larger brand, and in fact, even according to Euromonitor data, it is the largest actives brand in the country.

Even according to Nielsen, Derma Co shares are the highest amongst any other active brand in the country. I think we're well positioned.

How is the ARR now for the TDC brand?

We lastly disclosed it was at ₹750 crore+, and it continues to grow on from there.

Thank you. The last question, I just wanted to have a sense on how big is the GT sort of a revenue for us for FY26?

Any thoughts around how we want to grow this channel, because lots of action we have taken and it has started sort of helping us grow faster. That's the last question.

This channel continues to be one of our fastest growing channels now, and fundamental inputs including right manpower, right distribution partners, covering the right kind of stores, tracking execution at store level, ensuring quality of distribution and automatic ordering sort of systems, high visibility on distribution management systems, combination of all of those levers is what we have deployed, which makes us feel confident that we'll continue to win in the current outlets that we are present in, and also continue to add newer outlets, which has been our active agenda.

Sure, thank you. Thanks a lot, and all the very best.

Thank you.

Yeah. I just wanted to know the like-for-like growth if you remove Reginald from sales as well as EBITDA.

How would the core business growth look on sales and EBITDA for the quarter?

From a growth perspective, 21% will be the like-for-like growth. From our EBITDA perspective, the impact will be just about 30 basis points.

Rest all EBITDA is of the core business.

Okay. This 21%, you are removing the Flipkart impact also, right?

No, Flipkart impact will need to be further removed, which is why I mentioned it's like-to-like. If you remove Flipkart impact, then it's not like-for-like.

Okay. When you say this 40% growth for your younger brands, obviously this includes Reginald also.

Excluding

Reginald also, I think newer brands would have seen an acceleration, the younger brands in this quarter?

Yes, they are at 28%+.

28%+. Lastly, while you did allude to Mamaearth's growth for the quarter, can you give some flavor on what was the Mamaearth growth for the full year FY26?

For the full year also, it's in double-digit range.

Oh, got it. Thank you so much, sir.

That's all from me.

Hi. Congratulations on a good set of numbers.

Am I audible?

Yeah. Congratulations on the good set of numbers.

Can you give your strategy on driving premiumization in skin care and hair care, and how are we expecting this to impact growth and margins going forward?

Honestly, our underlying hypothesis around all our brands has been premiumization. We exist because we felt that the emerging middle class of the country was not being served with differentiated, more aspirational brand propositions which makes them feel like they're moving forward in life and upward in life.

Hence, all the business that we have built has been by tapping on the premiumization trend, and we expect this premiumization trend to continue for decades to come.

Understood. Another question, can you give some color on margin performance across a few brands, core brands, Mamaearth, Derma Co, and others, like their performance in FY26 and maybe some guidance for FY27?

From a margin standpoint, Mamaearth and Derma Co both are double-digit EBITDA positive now, and we foresee them to continue improving their margin trajectory in future as they have done in the past, right, along with growth. From a forward-looking outcome, like we said, from the next 5 years perspective, the company plans to grow at high-teens CAGR.

There would be years where we do a few points better than that and years where we'll do few points lower, but overall we'll grow at a high-teens CAGR from a next 5 years perspective. Effort would be to of course even do better than that.

From a EBITDA profile perspective, over the next 5 years we want to get 500 basis points better. Again, there might be years where we'll do better than that in terms of the 100 basis points per year, depending upon the strategy that we take, like last year was a strategy where we delivered higher than that sort of benchmark.

Overall, the plan will be over 5 years increasing at least 500 basis points in bottom line.

Got it. Just one more question.

The young brand and focus categories, how we have seen the growth for this year and quarter, should we expect it to continue driving at similar levels in FY27?

We expect the young brands to continue to grow strongly and drive growth for the company in the next year as well. The levels, etc., will keep changing.

Like I said, we're more aligned to the broader goals and numbers that we talked about, but yes, some of young brands will continue to drive stronger growth for the company and drive growth for the average.

About focus categories?

Again, yes. Focus categories are getting more than 90% of our investment and focus, and hence, we expect them to continue to be growth drivers for the organization.

Got it. Thanks a lot.

Thank you.

My questions have been answered. Thank you.

Thank you so much for asking those questions. It was a pleasure speaking to all of you.

We will see you in the next quarter with hopefully even better set of results. Thank you.