The Honasa and Mamaearth story was looking a little shaky one year ago. The beauty and personal care house of brands was struggling with slowing growth, had to rejig its distribution strategy, recover products from the market, and had slipped into losses.

Many asked whether the D2C brand was hitting a wall. One year later, as the company released its Q2 FY26 results this week, things seem to be back on track. Honasa pulled off a profitable quarter, a complete U-turn from Q2 FY25.

Has Honasa found its footing again?

During its Q2 disclosure, the company said that its bread-and-butter brand Mamaearth is back in “green”, after facing a major drop due to transition into the direct distribution model. After slipping into loss in the second quarter of previous fiscal year (Q2 FY25), Honasa has reported a consolidated net profit of INR 39.2 Cr in Q2 FY26.

However, Honasa did not provide any specific disclosures for Mamaearth and any other brand it owns. Honasa cofounder Varun Alagh said that Mamaearth has witnessed year-on-year growth, with its new rice facewash entering the INR 100 Cr ARR segment.

“We are very confident that now, moving forward, this growth in Mamaearth will only get better and towards the goal of double digit growth,” he added.

Brokerages are similarly enthused. JM Financial said Honasa’s pace of margin expansion has been much ahead of expectations for the past few quarters, led by improved mix and operating leverage.

JM Financial upgraded its rating to BUY for the stock with a revised 12-month target price of INR 330, just marginally higher than the previous target by the brokerage.

The brokerage believes this needs to be sustained by improving growth in Mamaearth, scaling up premium brands and bringing in more marketing efficiencies as working capital remains negative.

Therein lies the big challenge for Honasa. While the company has announced a foray into prestige and oral care categories, these will be capital-intensive plays. So naturally, questions are being asked about whether profitability can be sustained quarter after quarter, especially if the company focuses heavily on high-margin premium and prestige categories.

The Category Platter At Honasa

Honasa was evidently firm on one thing during its earning’s call — core or focus categories. This includes face cleanser, face serum, sunscreen, moisturiser and shampoo, under half a dozen brands. Honasa claims to have received 75% of its revenue from these core categories.

The Derma Co, is said to be the second largest brand in Honasa’s portfolio after Mamaearth, and the management claimed it is on track to hit INR 750 Cr in annual revenue based on the Q2 FY26 base.

While the brand has a low single digital market share in the category of facewash, it continues to report deeper penetration in sunscreen and face serum.

Without disclosing the exact revenue or sales figures for its........

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