Honasa Consumer (HONASA)

FairStock Score: 59/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 17.29% and profit growth of 99.27% show strong business momentum.
• Low debt-to-equity of 0.09 provides balance sheet comfort.
• Piotroski F-Score of 8/9 indicates solid accounting and operational fundamentals.
• Altman Z-Score of 5.61 suggests low bankruptcy risk.
• PEG of 0.86 is optically cheap if profit growth persists.

Concerns

• Valuation is extremely rich: P/E of 63.79, P/B of 9.38, and margin of safety of -344.80% versus Graham Number.
• Free cash flow is negative at ₹-53 Cr despite reported profits.
• Negative EV/EBITDA of -42.14 points to weak operating-level profitability.
• ROE of 12.58% and ROCE of 7.44% are moderate; zero dividend means investors depend entirely on growth.

AI Analysis

At ₹345, Honasa demands a serious hard look. I like growing consumer businesses, but a price is what you pay, value is what you get. This stock trades at 63.79 times earnings and 9.38 times book, while book value is only ₹36.89. Graham would never touch this. The Graham Number is ₹68.12, so the margin of safety is deeply negative—minus 344%. In other words, I am being asked to pay far more than conservative intrinsic value. The business does have merit. Sales grew 17.29%, and reported profit jumped 99.27%. The latest quarter shows sales of ₹587 Cr and net profit of ₹48 Cr. Debt is negligible at 0.09 debt-to-equity, and the Piotroski F-Score of 8/9 suggests good accounting quality. Altman Z of 5.61 also indicates no near-term solvency worry. But quality matters only at the right price. Return on equity of 12.58% and ROCE of 7.44% are modest for such a premium valuation. More troubling, free cash flow is negative at ₹-53 Cr. Profits on paper are not showing up as cash. A negative EV/EBITDA of -42.14 is another red flag; reported earnings are not being supported by operating-level profitability. With zero dividend yield, my entire return must come from future growth. The PEG ratio of 0.86 looks interesting only if 99% profit growth is durable, but high-multiple growth stories rarely sustain that pace. I need a margin of safety. This stock offers none. I would keep it on a watchlist, not in my portfolio.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer