First of all, congrats on decent performance for the quarter. So the first question is regarding young brands, so which was growing at 30% plus earlier. Now that growth has come to the 20% plus growth. I understand that the base is now getting a bit bigger . But how do you see the competitive intensity in this segment? So because we have seen that some of the large players have repositioned their flagship brands with active ingredient plays plus some of the science -based products also. So how is the competitive intensity in those segments and how you are planning to mitigate that?

Thank you for asking the question. I think, firstly, I would agree with the fact that the size of this cohort has actually become large. It's actually more than 50% contribution now. So as a group, it's actually bigger than Mamaearth for us now, and which is where the base effect does come into play. But within that environment, a 20% plus continuous, sort of, growth will make sure that it is a share gain play that we continue to do. Now, also specifically referring to what I talked about, the sunscreen impact is also higher within this cohort itself because this is the cohort where we have brands which have almost 70% contribution coming from sunscreen as a category. So there is a bit of that early monsoon impact as well. Competitive intensity, I would say, is high and has been increasing. But I think that's a reality that we are fairly tuned into. And we just need to ensure that be it our formulations, propositions or our communications remain ahead of the curve so that co nsumers choose our brands. So I'm not as worried about that. That's an edge that we need to sort of internally develop. But yes, I mean, that's my view on that.

Yes. And so if you can help us the growth, excluding of sunscreen impact, what would be the growth for the full -- for this quarter?

So honestly, there is -- at a company level, I would say the impact of sunscreen growth is about 200 basis points. I mean, of course, –the rest of the math can be done. But at a company level, the impact is about 200 basis points.

Yes, I completely understand that. And second question is regarding the profitability front. So we have seen decent increase in our profitability during the quarter. So what percentage of this contribution would be because of the lower A&P spend for th ese young brands now that has been becoming big. And also, in a way, it will help us to see what is the profitability of th ese younger brands. And if you can break up between The Derma Co and other younger brands?

Yes. So I mean, like we have talked about in the past, right, I mean, brand profitabilities are a journey of their age and scale. Derma Co became profitable. Last year it became a single digit, now is a high single -digit level of profitability. Rest of the brands, of course, are still in invest zone and hence, are not profitable, expected to become profitable in next couple of fiscal years basically. And that's the journey which they are all tracking on is how adds up.

Okay. Okay. And third and last question from my end. So now the base would be catching up or let's say, the low base of Mamaearth would be catching up because of the general trade reset that we have done. For the remaining part of the year, is it safe to assume that we can aim for double-digit top line growth and with improvement in profitability also?

Yes. We do believe that for the remaining part of the year, we'll have good double -digit value growth. And from a profitability perspective, we should be in this zone of 7% for the rest of the year as well.

Our next question comes from the line of Sucrit D Patil from Eyesight Fintrade Private Limited.

I have a specific question for Mr. Varun Alagh. This is Sucrit Patil here. Sir, my question is, as Honasa grows across brands and offline stores, what are the key bets you are making that you believe will drive the next phase of growth? And if some of thes e bets like new formats or markets don't work out, what is your backup plan to protect margins and keep the momentum going?

Thank you. I think like we have discussed today as well as in the past, there are 7 focus categories that we have chosen, which have been carefully chosen, keeping in mind the kind of growth, right to win, gross margin profiles, et cetera, that we have see n for these categories. And these are the categories in which our ambition is to, over time, become market leaders as a company. And I think that's the strategy that we would continue to implement. Now within that, whatever consumer needs, innovations, price points need to be serviced, we will continuously listen and provide those products to the consumers. But overarching, that will be the category strategy, followed by a strategy of ensuring that w e win across distribution channels, be it in online or in offline, by doing right data based investments in online and right infrastructural investments in offline. Combination of these two, we are confident will lead to market-leading growth for our brands in the medium term.

Okay. So just to close the loop, as the competition rises, are there any long-term levers like tech or supply chain or brand partnerships that Honasa is planning in the coming days? And if you are planning some partnerships, can you discuss it with which firm are you planning?

No, I think the long-term levers for us would continue to be -- they have been in the past, data and technology. That continues to be a very strong part of all decisioning that we do even within the company today, which is based on data and now based on a lot of LLMs that we have been internally instituting. Apart from that, the right media mix model ling, the right distribution partnerships with -- be it the offline or with the online players, be it e -commerce or QC players as well as strong partnerships with digital ecosystem partners like Google and Meta are what we are relying on and building strongly to deliver on our plans.

Our next question comes from the line of Mehul Desai from JM.

So my first question is, obviously, on the younger brands. If ex of TDC, if you can give some flavor on Aqualogica, Dr. Sheth, BBlunt, Staze, how these have done in the quarter? And is any of the brand where you are seeing results which are better than your expectations? And any of the brands where you think more work needs to be done? That's the first question. And the second question is on the margin side. Obviously, you did guide that 7% is something that can be sustained in FY '26. On that, I just wanted to double click. One, on the staff cost, do we see the INR60 crores run rate sustaining? And also the other expenditure this quarter, I mean, there has been a 10% de-growth. So it's a decent control that has been done on other expenses as well as the A&P spend side. So how do you see these cost line items also, whether that can sustain, especially on the A&P side? These are my two questions?

Thanks, Mehul. So on the younger brand side, I mean, we've been talking of them as a portfolio. We will continue to talk about them as a portfolio because comparatively, nobody else just gives brand level growth. That said, I think from a quarter 1 only performance perspective, like I said, the brands which have much higher sunscreen reliance like Dr. Sheth’s and Aqualogica were relatively behind plan, but we are very confident that over the yea r. They will catch up to their plans and the balan ced brands actually do ahead of plan. But overall, that's the picture that we saw. They're all in their journeys. They're all building other categories also which becomes important to diversify. And in those other categories, we are seeing high double-digit growth for most of these brands. So we are confident that over time, that will al so get built up and the diversification risk will also get reduced. Apart from that, on your point of margins, I think finally, we have -- these are the large cost heads for us, Mehul, the A&P and the opex cost head. Gross margin, like I said, we have been continuously focusing on, and we have seen slight improvement as well. But these are the 2 places from which we expect efficiencies to be effective , not just in this year, but also in the coming years to go. And hence, these are the 2 focus areas where we continue our control. And of course, because of the ESOP plan, we d o expect some higher impact on opex side. But overall, because of the effectiveness in A&P, et cetera, we'll still be able to manage and deliver the 7% that we have talked about. I hope that answers.

Our next question comes from the line of Jitendra Arora from ICICI Prudential Life Insurance Company Limited.

Congratulations on a good set of numbers. I just want to understand from you since we talked about the journey of margins and how they are a factor of scale and the age of particular brands. So just from your vantage point, as and when these brands, let's say, achieve a certain scale of, let's say, INR1,000 crores or INR1,500 crores, what kind of milestones do you have in mind as an organization that you would want these brands to see at? So would it be, let's say, a mid-teens kind of things, high teens or maybe in early 20s where we see some of the more mature organizations having their margins?

So to answer your question, again, we are very early in this journey. We do believe from a next 4 to 5-year view that some of our larger brands will surely be in the mid -teen kind of EBITDA range. And from there on, we will need to further see the journey of next 5 years, how it shapes. The other difference that we also see is the online versus offline kind of brand presence and creation, which is there between us versus some of the other FMCGs, where their online contribution is supposed to go up, our offline contribution is supposed to go up, but yes, from next 4 to 5 years perspective, we can still see that mid -teen in our top brands to be surely happening. And beyond that, I think in a few years, we'll be able to give you a healthier version of where do we see it from the next 7 to 8 years.

To put it differently, in terms of what kind of improvements do we expect to see, let's say, year- on-year? Like earlier, we had, I think, said that we will see 100 to 150 basis improvement on an annual basis for at least a few years till we reach. So do yo u think we are there on that journey that from here, let's say, if we are around 7%, we'll see 100 basis kind of improvement at least for next 2, 3 years, if not more and then obviously?

Very much. Not just 2, 3, right, but probably for the next 5 to 6 years, we want to ensure that that's the journey of improvement that we continue to be on.

And just one last question on how are we tracking in terms of market share in quick commerce versus, let's say, the GT channel?

So actually, the right question in comparison will not be QC versus GT. So quick commerce versus GT, our market shares are far higher in quick commerce compared to our market shares in GT. Actually, our internal benchmark has been quick commerce versus e -commerce shares. And in almost all of our focus categories, our quick commerce shares are higher than our e - commerce shares, which is where it's a very healthy sign that any transition that happens from any other channel towards quick commerce is actually going to be healthier for us.

Can we say the same about the margins, as in so if the shifts happen from e-commerce to quick commerce?

From a margin perspective -- compared to e-commerce, the margins are better.

Our next question comes from the line of Pratik from HSBC.

This is Pratik from HSBC. I have a couple of questions. You did highlight it in the presentation, but I'd appreciate it if you can elaborate more on how the core brand Mamaearth is doing across your focus and non-focus categories, please. And my second question is on A&P expenses. So they are running at about 35% of sales as of now, of course, with different levels for different brands. Can you elaborate on what kind of levels does a mature brand need? And what are we basically heading towards for the mature brands, say, Mamaearth a nd The Derma Co in a few years? Some color on that would be helpful?

Yes. I think the first question, like I said, right, we had recognized a few clear interventions needed in Mamaearth around October, November of last year. We took some time and worked on building a plan as well as content and strategy to execute these interventions, which we started executing from February onwards. In Q4FY25 itself, we could see some green shoots of these interventions in e -com and modern trade channels, where the focus categories, which contribute about , at that time, about 65% to the brand had started to grow in double digits in these channels. In Q1, the focus categories now contribute to close to 70% plus of the brand and are growing double digit in e-com and MT and across all channels in single digits. So again, showing green shoots in the right direction on the strategy that we have adopted. Like I said, if we continue to see these gains, we are confident that over the year, the brand overall should also be back to growth profile and then from there onw ards to a stronger growth profile over years is how we see that shaping. In terms of A&P expenses, especially for larger, more mature brands -- we think -- and this is something --

On the second question.

Yes, I was just taking that up. Yes. Can you hear us? Am I audible?

Yes, sir, you're audible.

Okay. So I'll continue. On the A&P trajectory, we believe over the majority of brands, this number should settle around 27%, 28% for brands, right, as they sort of grow over the next few years.

Pratik sir, does that answer your question?

Yes. So you're saying 27%, 28% is for mature brands and will probably be higher for different brands depending on the journey?

Yes, absolutely.

Thank you. Our next question comes from the line of Ne el Doshi from PL Capital. As there is no response from the line of the current participant, we'll move on to the next question. We have the next follow-up question coming from the line of Pratik from HSBC.

A quick bookkeeping question, please. Your stand -alone number seem to have been restated. Can you please elaborate on that, please?

Yes. I think that's because of the approval of the merger of our two entities, which are our wholly owned subsidiaries, Fusion, which houses our brand Dr. Sheth’s and there was another entity called Just4Kids. Those two got approved for merger and hence, they have been -- our standalone financials have been restated to that account.

Our next question comes from the line of Aditi Parmar from I-Wealth Fund.

Thanks for asking the question. Yes, we do have a healthy balance on our cash balance on the balance sheet and continues to grow with the negative working capital and profitable profile of the company. We continue to look at potential acquisition opportuni ties, which could be portfolio additive in nature in the areas which we feel are strong growth hypothesis areas for the category. I mean, we currently don't have anything which is in the stage that we can share with you. But that's a continuous exercise. We continue to do that. And we'll also look at figuring out younger opportunities that we can participate in the future to utilize this capital to drive growth from a long-term perspective. And outside of that, in the medium term, we'll also look at dividend as a strategy for cash utilization.

Our next follow-up question comes from the line of Mehul Desai from JM.

Just one question again on the profitability side. Varun, obviously, you had guided for 150 bps kind of improvement going ahead. Now obviously, this year itself, we are at 7 -odd percent. Would you still maintain that guidance of 150 bps expansion year -on-year continuing over medium term or you would say that, obviously, this year, obviously, you have got it ahead of your expectation?

I mean exact math would be difficult to share, but like we have mentioned the attempt is to improve profitability by 100 to 150 basis points each year. So if you look at from a CAGR perspective, years might vary, some will be higher, some will be lower. But overall, that's the trend line that we'll follow in the coming 4 to 5 years.

Got it. And lastly, from a regional performance perspective, is there any underlying trend that you would like to highlight? I mean, whether in the North, South, East, West, is there something different on a regional performance perspective?

Honestly, no significant differential in performance. But what I would say is, honestly, being a North-based company, we believe that we haven't leveraged on the South opportunity as well and as we should have. And that's an internal focus area for us on h ow to get our vernacular communications as well as our insighting right to better serve the South markets and make sure that our shares are fairly indexed across the regions.

Our next question comes from the line of Kimberly Paes from Envision Capital.

I just wanted to know that there were a few articles about us getting to the beauty device, beauty tech sort of market. Is this an area of interest for us? And how big would it be if it is?

No, currently, no strategic interest in that area. The article did not have any backing from the company and its spokesperson.

Varun, if you could share an update on Project Neev , how are things trending now that it's been, what, almost 8 to 10 months of that project? And any updates on the distributors that you appointed? Is there any churn or how stable that bit is? Yes, that's the big question for me?

Thanks, Vismaya. So I think the like I mentioned, all our efforts on stabilizing and building an infrastructure, which can service our plans over the next 5 years, right . I think it's going in the right direction, right . The direct distribution metrics, like I said, has -- are 50% up and our inventory levels are very well under control now, less than 30 days on ou r direct distributors. We have zero overdues in terms of credit and a very healthy credit profile also. We continue to improve the quality of our partners one geographical cell at a time. That's an ongoing work in terms of improving our infrastructure. But I would say, of course, the worst is behind us, right, But the best is still ahead of us. We still need to continue to work in terms of improving infrastructure quality across cells, which is an effort both in terms of people, capability and partners that our teams continue to engage.

Mr. Agarwal, does that answer your question?

Yes. Sorry, the line broke in between. Yes, got the answer. Varun, just one more bit is on the statement that is there in the presentation where you say the secondary sales are growing on a healthy rate. Now -- but when I look at the Mamaearth overall brand performance, it's probably a slight decline, whatever that quantum be. And then I would assume the general trade part of it is where there's still some bit of rationalization in the non -focus part, the ex-of focus part rather, which we are doing. So from that aspect, is there still a difference between the primary and secondary sales the way the brand is trending or not so much?

So very slight difference in case of Mamaearth, where we still continue to be very sort of sharp about correcting assortment and driving the right portfolio. But then there is also the positive delta that the channel is getting from The Derma Co scale-up and introduction, a combination of which is leading to positive sort of growth at the channel level.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Varun Alagh for closing comments.

Thank you so much, everyone, for patiently listening in and asking your valuable questions. We look forward to meeting you again in the next quarter. Thank you.

Thank you. On behalf of Honasa Consumer Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.