Honasa Consumer (NSE:HONASA) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Honasa Consumer Limited Q1 FY 'twenty seven Earnings Conference Call hosted by JM Financial. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Puja Kubadia from JM Financial. Thank you, and over to you, ma'am. Hello. Good evening, everyone. Welcome to 1Q FY 'twenty seven Earnings Conference Call of Honasa Consumer Limited.

0:51 Today on the call, we have Mr. Varun Alag, Co Founder, Chairman and CEO Ms. Ghazal Alag, Co Founder and Chief Innovation Officer and Mr. Amitriet Sohee, Chief Financial Officer. We'll start the conference with prepared remarks from the management, after which we will open the floor for question and answers. Over to you, Mr. Vaayan. Hi. Hello, everyone. Welcome to the quarterly call for Honasa Consumer for quarter one FY 'twenty seven. We have our team, Ramon, Gazal, and team with us. But I'll take you through the performance update quickly, and then we will open the house for question and answers.

1:41 So moving forward. K. Yeah. Sorry. Yes. So starting with the section, which is crystal gazing into the future of Indian beauty. This time, the theme that we have captured is the theme of fragrances as a category. Fragrance is a very interesting category. Globally, as we speak, fragrance is the largest delta driver as a category in beauty and personal care. It's also one of the largest categories and especially a category which has premiumized very effectively over the last couple of decades.

2:29 Currently, if you look at India, it is one of the fastest growing categories amongst beauty and personal care. Indian currently penetration for fragrances is just 3% versus 11% globally, which is why if you look at in terms of the BPC market share, so it... In India, it's just 3% market share versus 11% for US. It's also a category which is moving towards ecommerce. And, you know, seven years ago, one of the things which was being highlighted was that this category is very about experiences and hence might not move to ecommerce, but we have seen strong move towards e commerce because of trial packs that have come in this category as well as understanding of notes which have grown amongst consumers. If you look at Indian market also, we have seen a very strong transition from deodorants to fragrances.

3:26 So we believe over the next decade, this is going to be a very interesting category to participate in for BPC players, right, and which is why in our five year journey, we had talked about this being one of the categories that Honasa will be interested in unlocking as Verizon two categories. Moving from the future to present, which is our financial snapshot for quarter one. I'm glad to announce that this has been great quarter for the organization. The team has done brilliantly well in delivering 32% growth with EBITDA of almost 110 crores, right, and a PAT of 90 crores. This has also been driven with volumes. So 30.5 percent volume growth is what we have seen, and we continue to be negative working capital and generating almost 83 crores of cash this quarter. It's a quarter which has seen significant improvement in our EBITDA profile over the same quarter last year.

4:38 As we have mentioned in the past and we continue to hold, the two large buckets through which we see our business improving our EBITDA profile is the bucket of A and P, which improves with higher mix of profitable b b to b channels and growth momentum of our core brands as well as our younger brands becoming more profitable. And while all of this happens, the absolute end we spend still continue to grow and... Which is helping deliver strong growth for the company. So that model that we have talked about is clearly consistently playing for the company. And the second bucket that we have talked about is operating leverage. And as we scale, we also see fixed leverage coming in on... And in this quarter, we have seen almost 300 to three fifty basis points, which is because of mix impact and 100 odd basis points because of the operating leverage.

5:42 But there's also 50 basis points because of seasonality within this quarter for us. Q1 being summer quarter and some of our core categories being face wash and sunscreen, which are also high margin categories. And this quarter is usually also is a relatively healthier quarter. So that also is sort of there. And of course, thirdly, there is a nonrecurring onetime OpEx benefit that we have seen within this quarter of Aetna. But all in all, the commitment that we have made from a five year perspective, which is that we will continue to expand EBITDA margin by a 100 to one fifty basis points each year to get to that 15% EBITDA margin five years, right, is something that we are moving towards and is something that we stick to.

6:31 And we have, you know, of course, by quarters, it'll vary. Right? But we've seen a good movement as we have grown in this quarter. This is a slide that we have showed in the past three quarters as well after the Flipkart settlement process came in. And this is actually the last quarter we'll be sharing this because from next quarter onwards, the base of settlement will become clean, and and then we'll be able to our reported growth and our like for like growth will actually become same then. There is a slight difference that you see which happens because of the settlement issue. But we have explained this in the past as well and we continue to see this next quarter onwards. The healthy thing is about, you know, us being able to deliver this growth on the back of the stated strategy. The stated strategy was that we will be sharply investing in a few focus categories.

7:32 And those focus categories will help us drive strong growth. We have seen that. And focus categories actually have grown 35% plus, and and we have also seen growth coming across channels. Ecommerce channels, 40% plus growth, our general trade and modern trade, all the work that we have put in in redesigning our distribution system, the hiring of the right kind of GT teams has actually really helped us in terms of on ground GT growth, which are now at 40% plus for secondary growth. And and in parallel, the strong brand strength and traction that we have been developing is showcased in modern trade off takes, where we have 1% plus growth in terms of offtakes. And now the contribution of focus categories has also increased to almost 85% in even f five hundred seven.

8:27 Mhmm. Core, again, another area which has been an area of focus for us, right, to make sure that that our core continues to grow strongly, and this is where the large brand playbook that we have built has been tested. And clearly, every quarter, we have demonstrated it to become better. This is in line with that. Powerhouse has accelerated to high teens growth in Q1 FY 'twenty seven driven by focus categories. In fact, even within focus categories driven by our hero SKUs, which we've been focusing on. Dice has become our number one. Lace wash now. Upton is again doing in strong double digits. Shampoo is... Rosemary shampoo is doing in strong double digits and has become a 100 crore plus ARR ingredient now. And Sakhir also grew very strongly this season from our. So, obviously, whatever we are focusing on is where our growth is also coming from. And that just gives us confidence that this is a input driven growth model. And as long as we keep those inputs intact, we will continue to do that.

9:29 And, of course, this growth would not come in if the consumer love backing the brand would not exist. So we have worked strongly on product enhancement and communication relevance, and that is visible now in growth in brand searches, and it is visible in our share amongst handlers increase. It is visible in our Ganta brand power score, which is at its ever highest. So I think all in all, love is visible both in output metrics like revenue and market share, but also in input metrics which are measured from consumer tax. Apart from this, you know, the core is growing strong, but the new is also growing stronger. And I think for us, that's the headline that both parts of the business are growing strongly now. Young brands continue their strong growth at 40% plus.

10:23 Acologica, Doctor Shed, deep blood, stays, vaginal, all of them have their own niche, their own sort of categories, their own PGs that they're talking to, and we are using them to take higher share of DTC as a category and executing them well, which is visible in the outcome of those. Specifically, the good news is that, you know, we now have the second thousand crore brand within our portfolio. This is a very heartening moment in use for right, because we've been able to take our second brand to this, gives us more confidence that in future we'll be able to build more, you know, thousand growth brands within this company. And the brand recorded its highest ever brand searches. The has also seen strong traction in offline and modern trades, which is visible in Nielsen shares now. Face cleansers has become a relevant category, more than 200 crores run rate now. And the and the EBITDA profile as the brand grows continues to become better. And it's entered Teams EBITDA club now.

11:29 That's a healthy dimension that we continue to see for the brand. BDM Ventures, which we acquired in January, right, continues to do well. It has reached ARR of INR150 crores in the last quarter. We acquired, we've actually grown it almost 100%. And we've also been able to expand the franchise of the brand to Maharashtra, open a new category as well as unlock new channels, which is what our bases of acquisition growth modeling was. Right? And we've actually been able to deliver it. And this again shows that the company has the muscle to do inorganic acquisitions and actually scale them faster, right, which in the long term will continue to be growth driver for Honasa.

12:21 We have seen strong growth in both general trade and modern trade, right, again, in area where we strongly focused, improved our distribution model, improved our execution, got higher quality distributors, reduced our DOH, and all of that is visible in healthy secondary sales growth, which are coming in as well as the brand strength, like I said, is visible in the modern trade growth. And this has come by gaining share. So almost three fifty basis points gain in share in face washes, 160 basis points gain in share in shampoos. All in all, a pretty healthy execution by the offline team leading to outstanding results.

13:07 E commerce channel grows strongly. We have a strong focus and we continue to focus on three areas. We continue to build our focus categories, which are actually the one over 25% in e commerce. We continue to focus on gaining share in quick commerce. And we continue to focus strongly on taking share in tier two and beyond markets channels, which are strong there and which is visible in our overall growth. Our innovation capabilities continues to strengthen our portfolio across brands wherever we are seeing opportunities to serve the consumers better through newer ingredients, newer science, as well as newer formats. And the company continues to innovate and bring products that consumers are giving love to. And we will continue to do that. Right? Innovation has been one of our strong edges, and we will make sure that it continues to be. I talked about fragrance at the beginning of this presentation, and that was...

14:17 You know, one of the reasons was because we have finally entered this category. And we have talked about this category multiple times in the past that we like the category. We have been doing work on this category for almost one and a half years to make sure that we have a differentiated product proposition with which we are able to enter this category. And we finally have launched the brand called. It's India's first elixir based brand, which is the highest, doozed, the strongest form of perfume that we have brought to India. And these are one of the key needs for Indians given our temperature, given the sweat profile that we have, as well as external environment that we have is perfumes which stay longer.

15:09 And that's what we have optimized this for. The perfumes are clinically tested for twelve hours long stay. The design with which we have launched is actually patented by Honasa. Right? It is again a first world design that we have brought in fragrances, right, for our collectible bags. And we're very confident that this brand is going to be freaking amazing as we scale it. And with that, we come to the last section. As we grow, our community contributions also continue to grow. Our brands continue to plant more trees, teach more kids, give more certifications to women in saddles, provide more fresh water as well as do more health checkups. Yeah. And we'll continue to have purposeful growth rate as a company.

16:05 With that, I'll come to an end. Thank you so much for listening in. Would love to answer the questions that you have. Thank you very much. We will now begin the question and answer session. Session. Our Our first question comes from the line of Vivek M. With Jefferies.

16:58 Two questions from my side. First is, know you are a very young company with young brands. But when we look at purely from Y o Y comps, as we head into, let's say, the rest of the year, the comps start to get higher. On that, let's say, revenue base, what is your expectation for growth, let's say, from a nine month perspective? Vivek, so Vivek, like we've said, from a five year view, we have a high teens agenda. We will make sure that we deliver that CAGR over the next five years. If you divide that over years, there'll be years where we'll do better than that in terms of our overall growth profile. And there'll be years where we'll be just about that CAGR in terms of our growth profile.

17:49 And I think this is going to be an year where we'll be better than that CAGR on the growth profile. The attempt will always be to make sure that we continue to grow faster. Priority will be wherever we can reinvest to grow faster, do, right? And that's what we're doing. But we stick to our five year call out of where we want to get to, which we communicated in our Investor Day in Siji. Sure. And just a follow-up, Varun. Do you think on the Mama Earth side, how do you think the trajectory will be for rest of the years? You have done exceptional job in this quarter. And I think Mama Earth the last few quarters has also done very well.

18:38 What do you think will be the trajectory? And apologies if the question is more near term, but I just want to know how does it progress for the rest of the year? You might find my answer again boring. But like we have said, mama, from a five year perspective will be our double digit CAGR growth story. We stick to that story, right? We would make sure we deliver that. Again, it usually never is an average journey over the next five years. And there are years which we'll do better in terms of our growth profile And there'll be years where we'll be sort of almost at the level that you said. This year, again, for Mama Earth will be better than the planned growth profile is how it's sort of looking and feeling like, right, the inputs that we are doing, the distribution gains that we are sort of getting are actually serving us in getting to the goal that we want.

19:43 Got it. And second question is on your point on the call out in the presentation on gaining shares on QuickCommerce platform. Now two parts or two things over here. Apologies first if it's a naive question. But what level of data the platform share with you when you say gaining share? Is it at the category level? Or is it at an overall level, number one? And the second part is with the when we look at the any of the, let's say, QC apps, we look it looks like that the number of brands are like expanding by the day literally on a daily basis. How is it that you are able to still gain market share given that you are there is a traditional FMCG from which market share can be gained, but you yourself have been ahead in this game? So how are you ensuring so two parts, if you can answer on both, please.

20:38 Right. So, Vivek, we engage with the QC teams and we get understanding of category level shares. So we would track, for example, what is Honasa's share in a face wash, in a sunscreen. Of course, this is not a third party audited data like AC Nielsen, which is why we would not sort of, you share it in the platform. This is a data that between us, customer, and, you know, partner because of the relationship, and, you know, we we get it. And we track that data. So the data is at category level, and we look at on ourselves sharing every category and how we are getting. So that's to the first question. The second question, honestly, compared to ecommerce, quick commerce is in our view, especially in our category, a further branded purchase play, which means that if for any category in e commerce we see 50%, 60% of the sale coming from branded searches, right? In case of quick commerce it's higher.

21:49 And hence, we believe that QuickCommerce people buy... People are evolved enough to know the brands that they want to buy, especially in our categories. And they come searching for the brands. And and QuickCommerce is able to fulfill that in just ten minutes. So for us building the brand strongly in the minds of consumers, which is measured through our brand tracks, which is measured through the searches that we have, is the strength which was visible in our ability to gain share on e commerce as well. So as long as our brands continue to get stronger, they will continue to also gain share in QuickCommerce. Right? And we believe that in the long term Pareto is what will thrive on QuickCommerce as a format because finally it's it's not a unlimited, you know, unlimited physical space play... Digital space play, which is what, you know, ecommerce would be. And it is actually a constrained physical space play.

22:57 And over time, the best velocity per square feet is what the channels will need to get tuned into. And brands which do better will continue to do even better over time. So I think that's what our view is. Sure. Over time, I do understand. But at this stage gaining share, I think complements to you and your team and wishing you all the best. Thank you. Thank you. Our next question comes from the line of Videsha Sheth with Ambit Capital. Please go ahead. Hi. My first question was on the emerging younger brand portfolio and this I'm looking at excluding the Derma Co. So the organic brands or even the inorganic ones, be it V Blunt, Aqualogica, Doctor. Shapes, it's been a little challenging to scale those brands beyond the INR 180 crores, INR 200 crore ARR.

23:52 And with even Reginald reaching similar number of INR150 crore ARR, what are the initiatives that you're undertaking to scale up all of these brands to the next level, maybe to INR500 crore ARR? So I think the playbook is fairly similar to the playbook that has worked for Marmoth and Dermapore. It is about finding a differentiated proposition in a category, doubling down on that proposition and actually gaining share within that category with that proposition. Different brands go through their own different journeys. Bamad has gone through its own journey. Democo has gone through its own journey.

24:38 And over time, we need to keep reflecting and contextualizing them versus the consumer and how they are evolving. So each of these brands, the younger brands also, as they grow, we are also recognizing what part of the category portfolio mix, what part of the consumer brand mix is where we are seeing the best rights to win. Once that gets recognized, you invest harder in that sell. And over time, the brand starts to grow much stronger because of that clarity margin. So I think each of the brands is in that journey. And we just did packaging as well as proposition rehash for Aqualogica to make it far more relevant for Gen Zs. It's the first brand which is tested on Gen Zs claim.

25:27 That has shown very good results in terms of how we're seeing the roads for the brand, right? Similarly, are other actions around Bigger and Doctor. Shed, which are planned over the next six to nine months and you would see those sharpening happening on the brand. So I think in case of Reginald, of course, we had clearly got some underlying low hanging fruits like expansion onto marketplaces or expansion into other you know, geographies, which we deployed quickly to grow that. And so for each brand, there is a different strategy which gets crafted, and we test that out. And whenever we see green shoots on that, we double down on it. Right? But that's the that's the basic playbook that we'll execute. Sure.

26:13 My second question was on the margin. Now given that you're already at 12.5 normalized EBITDA margin, and there could be front ending of the 15% aspiration. But from a long term basis, how should we think about the balance between growth investment and margin expansion? So at what point of time would you prioritize reinvesting in the younger brands or the brands which are kind of fading out on the growth profile to get that incremental growth? So, honestly, the plan that we have shared as part of our Investor Day, I mean, assumes the prioritization of growth over over... What it's... And the commitment that we have made already takes into account the new categories or the new brands that we want to build. So it's just that, you know, even with that, we know that our core will also continue to grow, and the core will continue to become more profitable, allowing us to actually invest in some of these new categories or new brands that we want to build. But overall, still be able to deliver to the goals that we have committed. So the plan that we have shared already assumes that we are going to build young brands into larger franchisees. We are going to enter into new categories.

27:40 So it takes all of that into account. Thanks for that. I'll get back in the queue. Thank you. Our next question comes from the line of Aditya Sohman with CLSA. Please go ahead. Hi, good evening and thanks for the opportunity. So thanks for the clarification on sort of the margins on the slide that you have. So just to be sure, about 300 to three fifty basis points was sort of organic margin improvement. And then you have another 100 to 150, which is sort of seasonal, which may not recur from 2Q onwards. Is that the right way to look at this number for this year? I think from a year perspective, it's like we said, right? I mean, while we're saying over five years, we'll improve by 500 basis points, right? I mean, you divide it by average, that comes out to be 100. But there'll be years where we'll do better than that.

28:41 And this is an year where we'll clearly do better than that, At least 150 basis points plus, right, 100 to 200 basis points is what we see us doing over last year and this year. Yes, broadly, that's what we think from a year perspective is our efficiency. Thanks. No, that's clear. And secondly, you've had obviously very strong growth in general trade and modern retail. Now we've had this issue in the past where there was sort of an inventory buildup. I see in your slide you sort of called out that primary and secondary growth are similar. But how confident are you that you don't see any of this sort of issue as we saw before?

29:28 Extremely confident. We are now tracking every distributor's inventory and our collections are at highest ever levels. Tracking cash is the best way to sort of ensure you're tracking the health of our distribution system. So we do that very clearly. Our distribution system is on less than thirty days of inventory now. And with our kind of wide investment in wide assortment, and that's actually very tight to run with. Right? But we have been able to sort of achieve that. All of those factors, in fact, even if you look at retail STRs, our retail STRs are also relatively far healthier than the categories that we operate in. So from all of those angles, we are continuously tracking this and extremely confident that this is being built on a fairly healthy distribution system.

30:40 Our next question comes from the line of Jay Doshi with Kotak. I have a couple of questions. First one, in terms of the retail outlet reach of three lakhs. Is this for Mahmoud as well as the Dermaco? And if not, then there is Dermaco in the journey of offline scale up. And if you could give some color of INR1000 crores ARR, what is the split between online and offline ballpark at this point of time for Naramako? That's question number one. And the second one is some thoughts on the Vuance Pharma acquisition. How do you intend to sort of build the nutraceuticals business on that asset and how ballpark what should we expect in the next twelve months in that space?

31:38 Sure. Hi, Jay. So on the first question, Jay, the three lakh is actually the universe that we are reaching out to according to AC Nielsen. That's largely an intersection of the universe, but like largely Mama Earth is what is driving that expansion in terms of distribution. Mean, Domoco is relatively new in this journey about an year old into sort of getting into off line, but has seen very good traction in off line, especially modern trade and now in duty as well. And in general trade, we are already there in close to 50,000 outlets. And from a contribution perspective, from our latest contribution, 80% still online, 20% is coming from offline, which is GT plus MT for the whole is how we are seeing that shape.

32:33 On your second question, I think Honasa Health is the subsidiary that we have created. We are clearly very strategic thinking very strategically about this whole space and category. We believe nutrition and wellness is going to be a decadal opportunity like beauty and personal care. And we will get to create brands which stand for different niches, different kind of payoffs, and appealing to different kind of life stages over the next ten years in that space, which is why we have chosen to sort of, you know, create a separate company around it. Right? Now within that, we will do different propositions.

33:20 Fluence is one proposition that we announced where we're still in the condition precedent process and the diligence process, which is getting completed. As it completes is when we will sort of be able to talk about it getting integrated. Outside of that as well, we continue to think about potential organic propositions that we can shape over time to take on the category of nutrition and wellness, which we believe is a multi digital opportunity in India. Is it right to sort of assume that you will probably acquire some more brands in this space over time as you sort of build the portfolio in Nutrition and Wellness? Or will it be organic from this point?

34:19 Like we have always mentioned, Jade, our priority is always to find things that we can do organically. And even in this case, the priority will be to build the R and D capability to do things organically. We have already sort of hired the right kind of capabilities to actually be able to go after that organically. But of course, if we come across good inorganic opportunities where we are buying not only great brands, also bolstering our capability in this space as an organization, we will continue to be on the lookout for us. Sure. Thank you so much. I'll get back in the queue.

35:09 Thank you. The next question is from the line of Umang Shah with Banyan Tree Advisors PMS. Please go ahead. Hi, sir. Thank you for taking my question. Great performance. Sir, my question was why has it been that fragrance as a segment has not been tracked by any of the large players in India? What have been the challenges? And the second part to it was, if my memory serves me right, we had done a foray in fragrances through Mama Earth some time back, and we discontinued it. So what were the learnings from this thing? Yeah. So let me answer these two questions. Actually, second question first and probably that'll answer the first. So there is a certain world that Mama Earth as a brand operates in. There are certain categories where as a brand it has the right to win.

36:10 When we did our early research, we felt that fragrance was a category where the brand can extend into. But with early reads that we had with consumers, we were not happy in terms of the PMF we achieved, so we shut down. And those are experiments that we keep doing. But like we have under Mama, we have not called out that as a core strategy. In fact, none of the brands have that called out as a core strategy, core focus category because we realized that fragrance brands will need to be fragrance first, and if they want to win the fine fragrance market the long term. Once you win in fine fragrances market, then, of course, your ability to extend into other fragrant categories like body washes, body lotion, body care actually become relevant. And multiple examples exist globally where brands have been able to do that. But starting with fragrances as the core is essential, right, for you to win in fine fragrance.

37:12 It is what we learned from that experiment, which is why when we have chosen to launch specific brands which are targeted at, you know, gender specific fragrances and and building brands like that, right, and picking is where we are sort of, you know, starting this journey with. It also took us time to be... Build the product capabilities internally, to be honest. Mhmm. Any category that you want to succeed in, we've clearly learned that, you know, our own strong r and d capabilities, capabilities, understanding understanding the science of, you know, notes, hearing, how do you extend life of fragrances on skin is also critical. Right? So that's the time that you spend over last two years after shutting down that category in my work and actually building this internally for us. If you look at the India landscape, then yes, probably you would come across FMCG companies who have done fragrances because there are no pure play BPC companies that exist here. But if you look at BPC, pure play companies globally, right, you look at L'Oreal, you look at Estee Lauder, fragrances is one of the largest business areas that, you know, they have as a category.

38:25 And which is I believe any pure play FMCG company needs to have a strong fragrance play over time. It not only gives them entry into a relevant category, but also builds internal capabilities to do fragrance well in other categories as well. And that's the way we are shaping up. Understood. Understood. Very useful. Second question was our e commerce growth was 20%. Can you break it down between our own website versus QuickCommerce and e commerce? Yes. No, we usually don't give breakdowns of different channels. Okay, okay. Not a problem. Thank you so much. All the best.

39:12 Thank you. Our next question comes from the line of Nitin Shaktir with Green Capital Single Family Office. Hi, good evening. This is Nitin Shakta from the Green Capital Single Family Office. Congratulations to Varun, Ghazal and Ramanpreet for a stunning performance of a tough quarter. And my question is more related to in my conversations as an investor with many large FMCG companies that are in Personal Care, they've indicated a huge hit to their bottom lines in terms of either the cost of packaging or the cost of crude oil derivative products or the cost of certain logistics, which has increased over the last quarter and it's showcasing in the reserves. Now I don't see that impact happening in Honasa. So I would just like to understand what has the company done specifically in terms of offsetting the costs for this quarter because it seems very impressive that you probably only had an increase of INR30 crores, INR40 crores

40:43 rather than anything more than that on the cost of raw materials? Hi, Nitin. Raman, this is Said. Let me take this one. Yes. So I think like you rightly pointed out, of course, I think the crude oil price has been in an inflationary trend given the rest ratio wall. I think as for other personal care companies, we've also seen our pricing index for packaging materials specifically going up. And given that we we we know we were able to actually do a good job with the inventory management in q one, we did not see the implication of that in our financials as you see it, especially on the gross margin side.

41:28 And I think the real impact of it will be Q2. But given that we've actually taken calibrated price increases towards the end of Q1, the... We'll be able to offset any such inflationary impact on our procurement perspective. So I think that's how we've been able to manage it. I think we don't see any impact on our gross margin profile, specifically from this one. And hopefully, I think as we move into the second half of the year, some of these pieces, the inflation trend reverses, and we'll probably see some benefits coming into the P and Okay. That's clear. And my second question is, I'm not sure if Ghazal is on the call, and maybe Raghu can take this if she's not there.

42:16 Now in terms of new categories, which you're obviously looking at as nutraceuticals or fragrances, Are you also looking at certain micro trends within a large category? So for example, there is a trend of Luxmaxing for men. And within men in the hair care category, hair fiber brands like Topics are doing large global annual revenue. Would you also sort of look into micro category niche spends product development within the larger category? Is that interesting for the brand? Just wanted to have a sense of innovation in terms of the product development. Hi. Thank you for that question. I think we keep looking. We do keep looking at all of these trends. The teams are aware. We discuss it internally, but I think we've also aligned on a focused category strategy for the company.

43:12 So there is there is a lot of weightage given to what is it that we want to build next where we can create an impact rather than just hopping on to trend. So through that evaluation, while we continue to be very, very focused on our course categories that we have defined, there is a lot of experimentation that happens across brand. I mean, you will see brands like the brands again, etcetera, trying the new trends, be layering, be there type of thing, etcetera. But unless proven, we don't invest big amounts in that. Okay. Understood. Understood. But it's a very impressive turnaround and extremely great results in spite of a tough quarter.

44:01 I'm sure your third party suppliers are getting squeezed by the company, but I'm sure the company is doing a great job on the bottom line, especially in terms of the raw material costs. So all the best for the year. Thank you. Thank you. Our next question comes from the line of Nitin with HDFC Securities. Please go ahead. Yeah. Hi. Thanks for taking my question. Yeah. So in General Trade, my first question pertains to General Trade. So like we have seen consistent growth here. So just wanted to understand how is the growth with our old distributors like whom we have not replaced? So basically this is in the context like what if the growth is or like the new distributors are fixing issues in the newer regions. So just wanted to see like how is the like to like growth for MamaD brand or maybe in the offline where you have the existing distributors?

45:00 Actually, of this growth is from our existing geographies. So, I mean, existing distributor or new distributor doesn't matter. What matters is is in the same geography that we are talking about. And and as part of new project, in fact, we further narrowed our direct distribution from, like, a 150 cities to focusing on 100 cities. And so all of the growth that you see is coming on the back of that focused distribution strategy. And, of course, within those geographies, with our distribution partners, we are expanding to more stores, but it is coming from the same sort of geographies itself. Would you be able to sort of comment on like how is this GT growth for a brand specific like Mamaert?

45:56 GT growth for brand Mamaert will also be more than actually, you know, the average growth that we have to monitor. It's one of the drivers of brand. Okay. Yeah. That's hard thing to note. Second question is pertaining to, like, the younger brands. If I adjust for this male grooming, how would be the growth? And also if you can throw some light around like how is the performance of Acologica and how would be the ARR currently for that brand? So if you remove the BTM Ventures acquisition, the young brands are still growing at 30% plus. We do not further disclose numbers for all the brands. Right? Otherwise, we will start getting into like, pretty detailed and competitively sensitive information.

46:46 And... But Aqualogica, like I said, is doing very well, right, especially after the restaging relaunch that we have done in q one. And we are very confident of being able to continue to scale that brand and make it our next big bet on our side. Thanks a lot. But just wanted to take further on this thing like if you can highlight in terms of this proposition what we have with the Echologica like how overall the consumer cohort the demand is evolving in that space, not specific to the brand, but specific to the space if you can highlight? So Acologica is a brand which is targeted at Gen Z. And Gen Z already is becoming almost 45% buying hot in, you know, b b c categories, especially in ecommerce channels. Right? And that's where the brand is completely focused on and will continue to focus to be. Right?

47:45 So I think we're very confident that given the sharpness of the brand and the relevance of that TG as a buying power in the long term, that's what we are betting the brand on. Sure. Thanks a lot and all the very best. Thank you. Our next question is from the line of Jay Dosheev with Kotap. Please go ahead. Thanks for the follow-up opportunity. First question is on Mama Earth. Is the growth well balanced across online and offline channels or is it largely driven by offline channel only? Jay, both are strong double digits. Thank you.

48:32 Second is can you sort of talk a little bit about I know there is a slide, but rosemary shampoo as well as rice water face wash, these are products that have been around for a while. Are there any other new products which probably have not crossed INR50 crore ARR, but where you think can drive the next leg of growth of for MamaArth which early success gives you confidence that some of those products could be 50 crore, 100 crore ARR. Anything in the last six months or nine months that has been successful that you're launching under Mama Earth? Firstly, Jay, I think for us rice as a franchise itself can become a INR500 crore franchise is what we believe, right? Rosemary as a shampoo franchise itself can become a growth growth franchise in the next three years. So these franchisees, given the partitions and categories that they operate in, themselves have a long way to go in terms of the market share that they can gain. They both remain at single digit market shares as sort of franchisees.

49:43 So there is a lot more headroom there. But from a new things perspective, the three, four things that I would talk about, again, moisturizers is something that we're trying to build in Plummer and that's sort of now getting into that stage where it is close to that 50,000,000. We're very confident of how we'll execute that in winter. Sunscreens, Vitamin d release... Glow sunscreen is something which we saw do really well in this summer. So that's another candidate for becoming the next 100 crores sort of, you know, piece. And we've also, in our core categories of face wash and shampoo, opened newer partitions and while they're younger, but we are very confident in the in the medium term, we'll see them becoming also under control franchisees over the next two to three years. One is in acne where we have g three face wash that we are focusing on building. And and second is in Dandruff where we have lamellar shampoo that we are focusing on building. So multiple partitions like this, right, which we feel confident of into becoming the next engines of growth. But even the core continues to have a long way to go in terms of how large it can become.

50:59 Understood. The next question is for Raman. So usually this quarter is INR110 crore EBITDA and if I exclude the one time component it's close to INR100 crore. In the past what we have seen is probably 2Q is similar to 1Q or slightly lower, but then second half quarterly EBITDA generally tends to be much higher. So in that context the guidance that you've given both in terms of margins as well as probably growth or EBITDA growth seems to be a little too conservative. So what am I missing? Are you seeing any risk? Or is there any sort of other is there any phasing of A and P spends that you're expecting during the course of the year?

51:49 Can you explain the margin guidance a little better? Yes. So I think, Jayv, I... As you... You know, I think q one, the... Adjusting for the onetime nonrecurring piece, the numbers come around to 12 odd percent. And and, of course, like, you know, we were talking about earlier, there is clearly a seasonal, you know, leverage also as part of this. And now as we move ahead, you know, typically, q two, there is a... You know, the the q one seasonality, the summer category seasonality goes away, and then sequentially, the scale kind of dips a little. Having said that, of course, like, you know, like we've said in the past, you know, our focus is growth first. I think mindset is clearly growth first. And hence, I think if there are opportunities for us where we'll have to reinvest and target growth, I think that's how we will approach the rest of the year. And hence, it's...

52:52 Our focus is to ensure that the growth continues and sustains. And it's more about how the margin profile needs to we are looking at a four to five year ambition from a margin profile perspective. And you know, like Varun said, you know, 100 to 150 bps is what we target. And, you know, if if there is anything that we need to reinvest you to to fuel the growth and and make the business sustainable from a a long term perspective, we'll continue to do that. And hence, that's how we will sort of approach the rest of the year. Thank you so much. Congratulations on good performance and wish you the best for the year. Thank you. Thank you.

54:21 Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you so much, everyone, for dialing in. We look forward to meeting you again in the next quarter results. Thank you. Thank you. On behalf of Honasa Consumer Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.