Why Honasa Consumer Share is Rising: Flipkart Adjustment Hides the Bigger Picture

Honasa Consumer shares rose around 5% after the Q1 FY27 results, as investors reacted to strong growth and better profitability. Revenue from operations increased 27% year-on-year to ₹756 crore, while profit after tax more than doubled to ₹90 crore.

However, the reported revenue growth does not show the full picture. Honasa's like-for-like revenue was ₹785 crore, implying 31.8% growth. The ₹29 crore difference came from a change in the Flipkart group's settlement mechanism, which reduced reported revenue but did not affect absolute profitability.

So, the share price reaction was driven not just by the headline profit growth, but also by the fact that underlying revenue growth was stronger than the reported 27% suggests.

Honasa Consumer Q1 FY27 Result Highlights

• Revenue increased 27% YoY to ₹756 crore.
• Like-for-like revenue increased 31.8% to ₹785 crore.
• Underlying volume growth was 30.5%.
• EBITDA increased from ₹46 crore to ₹110 crore.
• Profit after tax increased 116.5% to ₹90 crore.
• Like-for-like EBITDA margin improved from 7.7% to 14.1%.

The key number to understand is the ₹29 crore difference between reported and like-for-like revenue.

Why Are Honasa's Reported and Like-for-Like Revenues Different?

The difference comes from a change in Flipkart's settlement mechanism. Certain logistics and fulfilment costs are now adjusted against revenue instead of being shown separately as expenses.

Honasa explained the impact using this example:

Earlier, Honasa could recognise revenue of 100 and separately report logistics expenses of 32. Under the new treatment, that 32 is deducted from revenue, reducing reported revenue to 68, while contribution remains unchanged at 38.

So the accounting treatment reduces reported revenue without reducing the underlying contribution from the sale.

In Q1 FY27, this lowered Honasa's reported revenue by around ₹29 crore. Reported growth was therefore 27%, compared with 31.8% on a like-for-like basis.

The Same Adjustment Makes EBITDA Margin Look Higher

The Flipkart change also affects how investors should read Honasa's margins.

Honasa generated EBITDA of ₹110 crore. Using reported revenue of ₹756 crore, the EBITDA margin is around 14.6%. But using like-for-like revenue of ₹785 crore, the margin is 14.1%.

So the adjustment has opposite effects on two headline metrics. It makes revenue growth look lower, but makes the reported EBITDA margin look slightly higher.

For comparing business performance with last year, the like-for-like numbers therefore provide a cleaner picture.

Does the Underlying Business Support 32% Growth?

Honasa's 30.5% underlying volume growth supports the stronger like-for-like revenue number.

Volume growth being close to revenue growth indicates that the increase was largely driven by selling more products rather than price hikes.

Growth was also broad-based. Focus categories grew more than 35%, e-commerce grew more than 20%, while General Trade secondary sales and Modern Trade offtake both grew over 40%.

This suggests Honasa's stronger underlying growth is not simply the result of an accounting adjustment.

Mamaearth Is Growing Again

Mamaearth delivered high-teens growth during Q1 FY27, an important development because it remains Honasa's largest brand.

At the same time, Honasa's younger brands grew more than 40%, reducing some of the company's dependence on Mamaearth for future growth.

The Derma Co has become particularly important. It crossed ₹1,000 crore in annualised net sales value and entered the teens EBITDA-margin range, showing that Honasa is building another meaningful and profitable brand.

Offline Is Becoming a Bigger Growth Driver

Honasa's General Trade secondary sales and Modern Trade offtake both grew more than 40%. Mamaearth now reaches around 3 lakh FMCG retail outlets, showing that Honasa is increasingly moving beyond its digital-first model.

This is also supporting margins. Management attributed around 300 to 350 basis points of Q1 margin expansion to a better brand and channel mix, including stronger contribution from offline channels and growth in Mamaearth and The Derma Co.

Not All of the Margin Expansion Is Repeatable

Honasa's like-for-like EBITDA margin increased from 7.7% to 14.1%, but the entire improvement should not be treated as sustainable.

Around 300 to 350 basis points came from better brand and channel mix, while another 100 to 150 basis points came from operating leverage and seasonality. Around 150 basis points, however, came from a non-recurring item, largely an ESOP-related payroll reversal.

Removing this one-time benefit would put the like-for-like EBITDA margin at roughly 12.6%, based on a simple adjustment. That is still significantly higher than the 7.7% margin a year earlier, suggesting the underlying improvement in profitability is meaningful.

Author’s Take

Honasa’s Q1 numbers suggest that the business is improving on more than one front. The Flipkart settlement change makes reported revenue growth look lower than the underlying trend, while 30.5% volume growth shows that the improvement is being driven by actual product demand and not just pricing.

The more important shift is in the quality of growth. Mamaearth is growing again, The Derma Co has reached meaningful scale, and offline channels are becoming a larger part of the business. This reduces Honasa’s dependence on a single brand and a digital-first growth model.

Profitability has also improved, but investors should separate structural margin gains from the one-time benefit seen in Q1. The next phase of the story therefore depends on whether Honasa can sustain 20%+ growth across multiple brands while holding margins at a meaningfully higher level even after temporary benefits fade.

If it can do that, Q1 may mark a shift from a recovery story to a more scalable multi-brand consumer growth story.