Honasa Spent ₹245 Crore on Ads. What Brought Mamaearth Back?

For every ₹100 it made in sales in the September quarter of 2025, Honasa spent ₹33.50 on advertising. A year later, the maker of Mamaearth and The Derma Co had added ₹65 crore to its ad bill. The cost per ₹100 of sales had come down by ten paise.

That ten paise is where the easy story about Mamaearth’s comeback runs into trouble. Honasa reported on November 6 that quarterly sales had risen 36% to ₹731 crore and net profit had jumped 87% to ₹73.25 crore. An ad bill of ₹245 crore looks like an easy explanation for the growth. It tells us the company spent more to be seen. To understand how it also made considerably more money, look at the expenses that grew much more slowly than sales.

The bill that barely moved

Honasa spent ₹101 crore on what its investor presentation calls other expenses, up from ₹92 crore a year earlier. That is the bucket left after the company separates advertising from its operating costs outside payroll and the cost of the goods. As a share of sales, the bucket shrank from 17% to 13.8%. Payroll also took a smaller share. Meanwhile, gross margin, what Honasa kept after the cost of the goods, actually slipped from 70.5% to 69.9%. The gains came further down the accounts. Earnings before interest, tax, depreciation and amortisation, or EBITDA, rose from about ₹48 crore to ₹93 crore.

On the November 6 earnings call, HSBC analyst Nihal Jham asked the question the ad figures invite. If advertising was taking much the same share of sales, was Honasa keeping more because it was paying less in commissions as more business went through stores and wholesale sales to quick-commerce platforms? Co-founder and CEO Varun Alagh said the change in where Honasa sold explained part of the improvement in other expenses. The company groups that benefit with advertising and promotion efficiencies in its margin presentation. It gives no separate figure for either.

The same tube of face wash can leave Honasa with a different amount depending on who sells it. On a marketplace, the brand can pay a commission and incur fulfilment costs. In a wholesale arrangement, the platform buys the product and handles the sale to the shopper. The wholesale price will reflect the platform’s own margin. The relevant question is what Honasa keeps after all those costs. At its June investor day, the company already made the case that several of its sales channels left it with more contribution after selling costs than its own website did. The September call offered evidence that where Honasa sells is now helping its group margins.

Why the shelf matters

In 2024, Honasa removed a layer of large wholesalers in its 50 biggest cities so it could work more directly with distributors. The move forced it to account for about ₹63 crore of inventory in the channel. The group posted a quarterly loss of about ₹19 crore, and management told investors Mamaearth was growing more slowly than it had expected. One of the problems it identified was a shift online towards products sold around specific active ingredients. Fixing the distribution system gave Honasa a better view of where the stock was. It still had to give people a reason to reach for the bottle.

There is evidence of a recovery at the checkout. Honasa says Mamaearth grew in the high teens this September quarter, and Alagh told analysts that roughly four-fifths of the brand’s additional sales came from its existing sales network. NielsenIQ figures cited by the company put Mamaearth’s share of urban offline face-cleanser sales by value at 7.1%, up from 5.7% a year earlier. In shampoos, its share rose by about half a percentage point to 2.7%. The rice and ubtan face washes are the products Honasa chose to put next to its cleanser numbers.

Those figures get us closer to a brand comeback than a tally of newly stocked shops. They also leave room for several explanations. An existing retailer can sell more because shoppers come back for the same tube, because it carries more varieties or because a discount gets more people to try one. Market share by value measures the money spent. It cannot tell us how many people came back to buy a second tube at the regular price. And ₹245 crore is what the entire group spent on ads. Honasa gives no comparable Mamaearth-only ad figure in the quarter’s presentation.

The first half makes the recovery harder to dismiss

Over the six months through September, Honasa’s sales rose 31% to ₹1,487 crore. Advertising rose about 26%, and its share of sales fell from 34.1% to 32.6%. Half-year EBITDA more than doubled to ₹203 crore. That is a stronger case for improving economics than the September ad ratio on its own. The comparison with the preceding quarter is less flattering. Reported sales fell about 3%, and net profit fell about 19%. The June quarter also benefited from a one-off item, largely the reversal of a payroll charge tied to employee stock options, according to Honasa.

There is another reason to keep the group and the flagship separate. Honasa’s younger brands, a category that includes The Derma Co, grew more than 45%, according to the company. On the call, Alagh said the group of younger brands still grew more than 40% with The Derma Co taken out. Mamaearth’s high-teens growth is meaningful on its own terms. The group’s faster growth belongs to a wider portfolio.

So, is it a comeback?

For Honasa’s operating business, yes. For Mamaearth, the market-share gains and the growth through existing sellers make a credible case that the brand is recovering. The tougher test is what happens to the rice and ubtan face washes through a few reorder cycles at the same shop. How quickly do they sell when a promotion ends? Does the shop reorder because customers ask for them, and who pays if the price needs to come down again? Those answers would tell us whether Honasa is getting better at selling Mamaearth, and whether Mamaearth is getting easier to sell.