Derma Co. to reach 1000 Cr ARR in 3-5 years: Honasa

Co-founders Ghazal and Varun Alagh said they expect Aqualogica and Dr. Sheth’s to join the INR 500 Cr ARR club by fiscal 2027-2029

Honasa’s offline channel share of its net sales increased almost fourfold to almost 35% in FY2024 compared to just 9% in FY2020

Honasa’s net profit increased by 21% YoY to INR 30.47 Cr in Q4 FY24, while operating income also increased by 21% YoY to INR 471.09 Cr in the quarter under review

Stock exchange-listed D2C company Honasa Consumer, parent company of Mamaearth, has forecasted its skincare brand The Derma Co. to clock annual revenue (ARR) of INR 1,000 Cr in the next three to five years.

In its annual report for the financial year 2023-24 (FY24), co-founders Ghazal and Varun Alagh said they expect the startup’s other two brands, Aqualogica and Dr. Sheth’s, to enter the INR 500 Cr ARR club between FY27 and FY29.

At BBLUNT, the company estimated that the hair care brand would clock an ARR of INR 250 Cr during the same period.

“We expect The Derma Co. to join the INR 1,000 Cr ARR club, Aqualogica and Dr. Sheth’s to join the INR 500 Cr ARR club and BBLUNT to join the INR 250 Cr ARR club in the next 3-5 years,” the co-founders wrote in a joint introduction to the report.

The report emphasized that regarding the future trajectory of the D2C unicorn, Honasa plans to continue to focus on “future business growth engines, including expanding our distribution and increasing brand awareness.” The startup also said that it will also look to incubate or acquire “new growth engines” and strengthen its performance in the future.

Meanwhile, Mother Earth continues to boost its omni-channel footprint. The company in its annual report said the contribution of its offline channel to its net sales grew almost four-fold to almost 35% in fiscal year 2023-24 (FY24) compared to just 9% in the fiscal year ended March 2020.

“Data-driven product innovation played a significant role in driving growth, with new product development (NPD) contributing 18% to our revenue in fiscal 2024,” Honasa added in its annual report.

At the end of FY24, Honasa claimed to have over 111 exclusive retail outlets (EBOs) across the country, along with over 8,000 stores across 30 modern retail chains such as Apollo Pharmacy and Reliance Retail’s Smart Bazaar.

The company also said that products from its flagship brand Mamaearth were available across 1.88 lakh retail outlets as of the end of March 2024.

In the context of the digital market, Honasa reported that the majority of its online sales (over 56% of all products sold online) came from tier II or lower cities, driven by higher e-commerce penetration.

“In FY2024, the company strengthened its position in e-commerce platforms. This performance was further supported by increased presence on platforms with (a) stronger presence in lower-population cities. Additionally, rapid growth was observed in emerging channels, with QSR emerging as one of the fastest growing channels,” the annual report highlighted.

Founded in 2016 by a husband-and-wife duo, Honasa has a product portfolio of six beauty and skincare brands, including Mamaearth, The Derma Co., Aqualogica, Ayuga, BBlunt and Dr. Sheth’s. It sells a range of products through both online and offline channels.

Honasa’s net profit rose by 21% year-on-year (YoY) to INR 30.47 Cr in the fourth quarter of fiscal 2024. Meanwhile, operating income also rose by 21% to INR 471.09 Cr in the quarter under review as compared to INR 387.8 Cr in the corresponding quarter a year ago.