Honasa Consumer Ltd (NSE: HONASA) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Varun Alagh — Whole-Time Director and Chief Executive Officer
Ghazal Alagh — Whole Time Director and Chief Innovation Officer
Analysts:
Pooja Kubadia — Analyst
Percy Panthaki — Analyst
Vivek Maheshwari — Analyst
Mehul Desai — Analyst
Unidentified Participant
Jitendra Arora — Analyst
Manoj Menon — Analyst
Nitin Gupta — Analyst
Mudit Minocha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q4 and FY ’25 Earnings Conference Call of Honasa Consumer Limited hosted by JM Financial Institutional Securities Limited. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Puja Kubadia from JM Financial Institutional Securities. Thank you, and over to you.
Pooja Kubadia — Analyst
Good evening. I would like to welcome you all to 4Q FY ’25 and FY ’25 Earnings Conference Call of Honasa Consumer Limited. Today on-call, we have Mr Varun Allag, Co-Founder, Chairman and CEO; Ms Gazal Alag, Co-Founder and Chief Innovation Officer; and Mr Raman Preet Sohi, Chief Financial Officer. We will start the call with opening remarks prepared by the management, followed by the Q&A session. Over to you, Mr Varun thank you.
Varun Alagh — Whole-Time Director and Chief Executive Officer
Thank you. Hi, everyone. Welcome to the Q4 performance update for. I’m going to spend the next few minutes just taking you through the update that we’ve shared and then we will open it for your questions. Starting with the first segment in the — of our presentation, which is basically crystal raising the future of iBeauty. It’s a segment that we’ve been sharing for the last four quarters as well on what our view of how Indian BTC segments are going to shape is. And today, we’re going to talk about hair-care and which we believe is a large category that’s growing and there is there is a lot of growth that’s going to happen because of premiumization in this segment. And our view is shampoo conditioners, hairstyling are categories which are going to grow faster than others in this segment. And even within these categories, we believe there are four areas which are going to drive premiumization. Yeah. Within shampoos and conditioners as a category, there are three clear emerging spaces where the consumers are willing to give premium for brands. And the first one, which has already existed and has been taking this share has been the natural segment and naturals as the category has actually grown 2x compared to the rest of the category over the last five years as well and we expect naturals to continue to take share from non-naturals over the next five years as well. Yeah. There are two newer spaces, one which has already emerged, which is the space of our professional hair-care, be it in salo or at-home use and this is also a market which we expect that will grow much faster in coming times and will help premiumize the category. And then we have BBLUND as a brand which plays in this. And the second big trend that we see shaping over the next five years is the way actives have taken share in skincare as a market and scalp is the new skin and hence actives in hair-care is a trend that we expect to see over the next five years. And our brand, will participate in the category through that trend. And overall, I think premiumization is something that will continue to drive this category. Moving on to our financials of quarter-four and FY ’25 and we have been working on certain fundamental changes and improvements, be it in our distribution system or in our investment allocation business. And we’ve started to see green shoots which are showing up and which are now visible in our results as well. And if in Q4 on ASA grew by 13.3%, a healthy double-digit growth. And the UVG growth, which demonstrates our consumer traction was healthier at 21.2%. The gross profit has improved Y-o-Y and the EBITDA been stable compared to last quarter, even after some of the experimentation that we have done this quarter and we generated almost INR74 crores of cash being a negative 24 days working capital for the company. Yeah. From a FY ’25 perspective, we’ve grown at about 7.7% to deliver INR2,067 crores in revenue. Our gross margin improvement has been there and the profit did take a hit because of the project need for execution and that we have to sort of take. And but overall, I think some of those fundamental changes have actually added beautifully the company’s future and we’re already seeing reinsurance of the same. If you were to double-click on some of the highlights of the quarter — the first that I would start with is our core and this is a — with a strong focus area for us and we made certain changes to make sure that the brand gets back on the growth path, which is where we would like to see it. Look, we have decided to focus on a few big categories, which is space wash, shampoo, sunscreen, moisturizer and BB. Also changed our investment allocation mix towards this and deployed a better media mix, which is more effective. And it’s happy to share that we are seeing early green shoots of this change in strategy. And these focus categories which contribute to about 70% of the brand and in Q4 itself in channels like e-commerce and modern trade where you see the impact of any of your actions earlier than other channels where there can be a lag and have actually grown in double-digit kind and for Q4 and which is a healthy sign, we will just remain consistent with what we’ve been doing and also sort of continue to drive our distribution and product superiority agenda and we are — we are very confident that over the coming year, we will be able to turn-around the brand opportune as we have as we have sort of planned. Yes. This is also visible, of course, in the retail Nielsen shares and our brand has gained about 100 basis-points Y-o-Y in facewash as a category becoming top-five brands and facewash is in base of Nielsen in the offline market as well now. And even in shampoos, we have gained 22 basis-points in value market-share and so the changes that we have done in our GT system are also sort of starting to stabilize and show-up in some of the Nielsen shares. Coming to the GT distribution system update and overall offline upgrade, I think we are seeing the changes now deliver a stable, consistent sort of outcomes. It’s a step-by-step turn-in need to build this back inch by inch and but we are clearly seeing that happen. The teams have been consistently adding direct distribution business. For FY ’25, our direct distribution has now reached about 102,000 outlets, which used to be at about 45,000 to 50K before we started this year, right? All of this has happened because of the direct distribution transition that we have done. Our direct distributor contribution has gone from 38% to 71% which is what we had planned for and as we ended the year. The moderate offtakes also in Q4 on account of the investment changes that we did have becoming healthier and at about 20% plus for our key accounts. And younger brands, of course, continue to drive a good growth momentum for FY ’25, young brands have grown at 30% plus Y-o-Y. There is new categories and portfolios than each of the brands are building and they are focusing on making sure that they win and build-in these portfolios, both from product superiority and right. I think the Dermaco continues to move from strength-to-strength. It is the largest vaccines brand in the country and continues to grow strongly. And this quarter because of the improved distribution system where we clearly called out that improving that pipeline will also allow us to build our other newer brands as they scale. And we have actually seen that goodness coming in and now in offline, which is GT plus MT in March has done INR100 crore ARRs standard and this is a healthy sign that the distribution system is able to distribute more brands as well and as well as the brand is seeing traction in offline and that will also become one of the levers of growth for the brand in coming years. And of course, online continues to enjoy the consumer love that it was in terms of being a seller. It’s face cleanser business, which was the third business from sunscreen that we were building has now grown about 100% in Q4. So that’s also a sign for the bank. Yeah. Our innovation capability continues to be our strong area of focus. But now we are deploying it very sharply across our focus categories for to drive both newer partitions ingredients as well as to drive premiumization and we’ve done some really breakthrough innovations in the prestige category and to build premiumness for our brands. And these are first two India innovations and was the first Indian brand to launch a micro needle based shot in the first brand to launch a based Ampure kit in CMs and Dr Sheth is the first brand to launch PDRN as an active in India. So clearly we are looking at how we can bring the best of global actives and technologies to India and also at prestige pricing for our brands to become more premium. Yeah. R&D and product superiority continues to be of an agenda which is very-high priority for the team. And if this year we’ve done a fair bit of strengthening across our R&D capabilities by our early acquisition of Cosmogenesis and then further strengthening our R&D. And it’s already showing in our product improvements and superiority that we’ve been driving. Yes. These are two examples of what we’ve been able to achieve over the last 12 months with this new R&D vessel. We have improved our serum basis,, by working on a new technology, which is based on certain penetration enhancers and using nano particle actives and sizes and which is shown in consumer preference as well and wherein blind testing thermoco serums were preferred significantly over leading Indian brand and a leading international brand. And also in case cleansers, China, mama, gel face washes and have finally beaten the market-leading of gel face washes in blind testing and again something which is a area that is going to be an area of continuous focus for us. We are not stopping here. We will continue to work on these areas and further improve and extend these games and as well as deliver them in other different categories as well. AI is something which is clearly not a buzzword anymore. It’s become a genuine technology that is going to make a significant difference in terms of how organizations can become both more effective and more efficient. And agentic workflows is something that at, we are taking extremely seriously and we’ve got a dedicated team who is working on different agenting workflows, which can help make our different rooms more effective now across marketing, supply-chain, finance, et-cetera. And these are some of the examples of things which we’ve already executed and on Skin analyzer, purchase assistance, which can actually talk to consumers in any language and-answer any kind of questions around products and the social listening has been taken to a next level based on the learning models and the content evaluation and generation, which is being done by generative AI and the — as well as in customer service, multilingual capabilities and et-cetera, have already been moved. And I think this is an agenda whereas in this year we want to focus a lot on and build a lot of internal agent workflow tools, which will help our teams execute better. Outside this, our purpose agenda continues to remain strong. As our brands grow, their contribution to the community also grows. And this year, we expect to hit the 1 million freeze mark that we had sort of set-out four, five years back when we started this initiative. And the rest all the brands also continue to touch the communities from across India and add value in whatever little way we are able to look. With this, I come to the end-of-the presentation. Thank you so much for listening. Would love to answer your questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. All participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Percy Panthaki from IIFL Securities. Please go-ahead.
Percy Panthaki
Hi, everyone. Good evening. I just wanted to understand the Mamath growth on a primary basis. Has it turned the corner and come to a positive Y-o-Y growth because last couple of quarters, I mean the growth was — I mean, it was a decline rather than a growth. So have we reversed that or are we still marginally negative?
Varun Alagh
Hi, Percy. Percy, as I mentioned in Mama, our entire focus is now on certain set of focus categories. And in those focus categories and yes, our growth is positive and it is in double-digits in specific channels like e-commerce and modern trade and those are the categories that we will continue to sort of focus on and track and we’ll continue sharing updates on those categories as a sum with you going-forward as well. And those categories currently contribute to 70% of the brand and we believe with the kind of efforts we want to put in over the next two to three years, they should get to 85% to 90% of the brand’s contribution, right? So that’s the strategy implemented. That’s the early result that we’ve seen because we’ve only implemented from our efforts starting February onwards.
Percy Panthaki
Okay. Got it, got it. So Mamarth, as a whole, including the non-focus categories, when do you think that comes into a positive Y-o-Y growth territory? Will it be like in one or two quarters or could it be longer than that in your view? Because I understand the strategy overall and I agree with that, but just the fact that the non-focused parts declining does put a pressure on the overall top-line growth. So just wanted to understand from that point-of-view that as a brand as a whole, when does it come to a positive Y-o-Y growth in your view?
Varun Alagh
Let’s difficult to comment. I wouldn’t even want to sort of comment that because the — like it’s — the maths is that these focus categories where they’re putting in the efforts and need to show the right kind of green shoots. And you know, now it’s only been sort of two to three months of execution of those strategies. And hopefully the growth momentum in these categories continues to become better the decline in non-focus is sort of we can’t comment on how much or you know-how that will sort of take shape. Yes. But from a strategy perspective, I think our whole goal will be that these focus categories continue to grow in double-digits as we move forward there.
Percy Panthaki
Okay. Got it. On the other brands, apart from Mamath, you’ve mentioned that they are at 30% plus. So just a small clarification here, is it that as an aggregate, they are 30% plus or each of them individually also is 30% plus? And if there is any sort of a sort of differential performance in terms of some of the brands sort of doing significantly better at 50% and some of the brands being slightly slower at, let’s say, 15% 20% if — I mean, without quantifying, if you can just call-out any such differential, if at all, there is one, that would be great.
Varun Alagh
Yeah. No, the number actually refers to aggregate and it is not — so we’re not discusing brand level performance and — but of course that aggregate is arrived by certain brands being above that and certain brands being below that. And so that’s how —
Percy Panthaki
Got it. Got it. No, my only question was that do we — do we feel that each of these four or five different brands are sort of doing well on their own or is there any of these brands where you think that this is a little bit iffy in terms of that particular brand’s growth trajectory,
Varun Alagh
I think every brand has its own journey, every brand sort of goes through a different kind of category creation development and so our agendas depending upon what kind of category and proposition the brand lies and how consumer sort of traction on that sort of category or trend-line is — our investments also vary according to that and the growth will also vary according to that much like as long as the overall cohort sort of continues to do well and gain share, I think that’s what we should probably also.
Percy Panthaki
Fair. Last question is on the GT sort of disruption that we had. I mean, where are we on that now? And would you say that stock levels have stabilized or are very close to stabilizing? And let’s say from next quarter within GT, we would have primary equal to secondary or it will take a few more quarters for that.
Varun Alagh
We’re in terms of our transition in terms of our inventory levels in cleanups and all of that is completely done. And now as we move forward, it’s just about building that strength. And every quarter, we’ll continue to sequentially build-on that sort of strength. It’s a — it’s a bit of a physical inch-by journey and where a lot of on-ground execution is required to get better. But as we have shown in the last 3/4 also how the team has been able to build direct distribution, I think that agenda will continue to thrive over the next few quarters as well.
Percy Panthaki
Yeah, my comment was just in the context of your comment in the PPT saying secondary has grown faster than primary, which means that you’re still sort of bringing down stock levels with the distributors. So is that — is that something that will still happen over the next few quarters or we are at the end of that process now?
Varun Alagh
Yeah. I mean, we are almost at the end of that process. I mean, see, some of some of that primary is very BAU business because on an ongoing basis, there is also a sort of damage expiry that you take-back and sometimes secondary primary gap is because of that also, but now it’s not because of inventory levels, right? Our inventory levels are absolutely in the right range. And so I mean going-forward, that is not something that we see as a — got it. Got it. Yeah, that’s all from me. Thank you and all the best. Thank you.
Operator
Thank you. Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Next question is from the line of Vivek M from Jefferies. Please go-ahead.
Vivek Maheshwari
Hi, good evening, Varun and team. Hi, am I audible? Yes. Okay, perfect. So Varun, continuing from the previous participant. So in terms of Journey, what we saw second-quarter was probably the trough and what you answered per se in terms of inventory levels are you fine now. So do you think the — let’s say, the second-quarter marked the trough, things got better in 3rd-quarter, even got, you know further better in 4th-quarter. From here on, the cleanup bid is done and now it’s more around growth. Is that fair from your energy perspective from management’s time and bandwidth, that is where you will be spending time or the other way of putting it is, are there any areas which require serious attention or it’s more around growth that you’ll be focusing on.
Varun Alagh
Vivek, so I think the management bandwidth is now fully dedicated to getting our strategy into execution. And our strategy had two-parts to it. The first part was where to play and which is identifying the right categories and partitions in which we want to play. And second was how to play. And I think the where to play piece of our strategy, we clearly have been able to arrive at and that part is sort of done. And the how to play part is where we believe we are 70% there all the experiments pilots, etc., that we were doing and most of them have clearly sort of delivered learnings. We are 70% there. I think over the next two to three months, we should further strengthen the how to play a strategy and sharpen that. And then onwards, it’s actually just pure execution of that, which we intend to do violently and make sure that we get to our long-term goals that we had set-out for. So that’s how we feel.
Vivek Maheshwari
Okay. That’s good to know. In terms of FY ’26, both on growth as well as margins for him, what are — what are your, let’s say, expectations? I wouldn’t say guidance, but what is it that you’re thinking right now for F ’26?,
Varun Alagh
The plan would of course be that we deliver a double-digit growth in FY ’26 in terms of value. And we intend to continue to use every quarter to build that sort of go from strength-to-strength in us in terms of our execution. And even in terms of EBITDA, of course, compared to last year, of course, we will see a significant improvement by about 50 odd basis-points over last year in the FY ’25 by the exit, we hope in terms of EBITDA profile, we should get back to our FY ’24 levels.
Vivek Maheshwari
Interesting, interesting. And the other bit on TDC, where TDC is in its journey, this INR100 crore ARR, it’s on — in the offline channel is way probably ahead of — way, way ahead of where Mama Earth was. Is my understanding correct that whatever measures you have taken on the distribution side on the offline bit has obviously helped or corrected Mamarth, but it actually serves as a platform for, let’s say, TDC now and then AquaLogica and other brands in future.
Varun Alagh
I would say absolutely the correct understanding Vivek. And that was the — that was the whole intent of making those fixes, going to that pain and building out this distribution system as well. And this is supposed to be pipeline for all of our brands in future and the healthier, cleaner, broader that pipeline and it will be able to carry more business into the offline distribution channels and which we are already starting to see and so yes,.
Vivek Maheshwari
Okay, got it. And last question, is,, when you say the focus categories, which is 70%, that has grown double-digit. Is that you are talking about the basket as a whole or you are talking about this on e-commerce and modern trade, this 70%.
Varun Alagh
So this 70% on e-commerce and modern trade has grown in double-digit. Yes. And this is only in Q4, right, whereby February is when we really started executing our strategy. So I would Call-IT a good green shoot kind of because these are the channels where the impact of whatever you do shows up earlier while other channels might have
Vivek Maheshwari
Understood thank you and wishing you all the best. Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press R&1 on your phone. We’ll take our next question from the line of Mehul Desai from JM Financial. Please go-ahead.
Mehul Desai
Hi, team. Thanks for taking my question and congratulations on a good set of numbers. First question, one just on the A&P spend side, how do you see your A&P spends going into FY ’26 or what we have seen as a percentage to sales in Q4? Do you think that is what is — will be maintained or you see leverage benefit coming in on the A&P side also in FY ’26, ’27? And second, apart, I mean, I understand that obviously is doing fine. The other brands — other newer brands and other than, which are the — I mean, if you have to take any one or two names which you think that can see a journey like in FY ’26, ’27, which would be that brand. That’s — these are the two questions from my ask.
Varun Alagh
Yeah. Thanks, Mehu. So from an A&P perspective, like we have mentioned in the past, that’s the bucket where we — where we see potential leverage and we will drive effectiveness to that end. And hence, if there is EBITDA improvement that will happen, that will be one of the buckets which will — which will add to that improvement. And from a — from a perspective of your second question, which is the way performed, which are the brand — I mean, honestly, our attempt will be all — our brands move-in that dimension over the next three to five years and where I’m very confident that the spaces that we have chosen are spaces that are very consumer-oriented and our investment in these brands should also pay-out — pay-up with a similar kind of trajectory in these brands that Devoco has seen. And so attempt will be on all fronts. Let’s see which horse sort of breaks through first.
Mehul Desai
Sure. And just on Dermaco, if you can give some flavor on how was the margin trajectory for Dermaco? And last question would be on what are your targets on the distribution expansion on the offline side for FY ’26?
Varun Alagh
So from a Dermaco perspective, last year was the year when the brand became EBITDA neutral and this year the brand has become single-digit EBITDA-positive, I guess and I think we’ll continue to strengthen its EBITDA profile going into next year and the next and that’s the trajectory that we want to see for the brand. Your second question around, could you repeat that?
Mehul Desai
Yes. Because your target for the distribution?
Varun Alagh
Yeah, sorry, sir. Yeah. So in the coming year, and we would like our GT channel to add at least 50,000 more outlets into our direct distribution and from a 12-month unique coverage perspective, so we would want to see this number, which is 100,000 today get to a 150,000 as we exit the next year from our 12-month unique coverage.
Mehul Desai
Got thank you so much and good luck for FY ’26.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press R&1 on your phone. We’ll take our next question from the line of Neil Doshi, an Individual Investor. Please go-ahead. Hello. Am I audible? Yes, please go-ahead.
Unidentified Participant
Yes, sir. Actually, I wanted to ask with regards to more direct-to-consumer Mama Earth stores and shops which can be made open in malls, etc., high streets. So what is the view regarding that as well as export contribution with regards to Middle-East and other regions that we export to.
Operator
Hi, Neil. So we have EBO channel. Mama currently has over 100 stores across 20 plus cities in the country, most of the A malls and prime malls locations, Mama has EVO stores and these stores serve both the purpose of bringing our larger assortment and categories to life in the physical world as well as purpose of building a majory for the brand and — but we don’t have significant plans on sort of using that as the core business or distribution channel, because the expansion channels are fairly limited on that front. And if our distribution and business channels continue to be GT, MT and online, which we focus on. And our international focus also, while continues to be there as a business and it’s not a key management sort of focus and agenda and our focus continues to be on India market and tracking that for overall and building brand for Indian Gen Zine and that’s what sort of will remain focused. We do get demand from other markets and we have a strong international team that services that demand, but that’s about. Okay.
Unidentified Participant
Okay. Thank you so much.
Unidentified Participant
Thank you.
Operator
Thank you. We’ll take our next question from the line of Jitendra Arora from ICICI Prudential Life Insurance. Please go-ahead.
Varun Alagh
Hi,, congratulations on the set of numbers he delivered this quarter. My question is more around understanding the construct of the growth, given that we had called out a top-line growth of 13%, whereas UVG growth is 20%. And my own perception was the growth is getting driven by brands like the Derma company Aqua Logica, which my perception was are more premium in nature. So just want to understand this gap between UVG and top-line growth. Yeah. Hi,. Thanks for asking that question, Presidentit. So there are actually two sort of core reasons of why this sort of growth is, you know, higher in terms of UVG versus. We have two types of businesses, right? We have a B2C business and we have a B2B business. And our — our business on marketplaces like Amazon, Clip card as well as our D2C business and falls in the basket of B2C businesses and then the entire business of modern trade, quick commerce, GT and falls in the space of B2B businesses. No. Now B2B businesses have lower realization enough on you know, revenue compared to B2C businesses.. So for each unit sold, you make lesser revenue in B2B compared to B2C. And the contribution of B2B businesses for us has been going up and of course in e-commerce, it’s because of the quick commerce growth that has been happening and that’s the B2B business transition from a e-commerce platform that we’ve seen and as well as beauty platforms growing faster, that’s a transition that has also led to B2B to B2C and then in offline side, again, because MT has grown well as well as GT sequentially has done better and those are contributing to a shift towards more B2B driven growth and which is why UVG is higher than?
Jitendra Arora
Okay. Thank you. One more question would be, Varun, given that you called out that we are amongst the top-five brands in shampoos, if I’m not mistaken, right? Phase-1? Phase-1. Phase-2. So and we’ve also improved our market-share in shampoos by around 20 bps. And yes. Yes. So just want to understand, given that shampoo large-volume and maybe slightly lower-value, will also be through low unit packs where perhaps we may not be participating as of now. So if we were to look at the — where we are participating, how would the share be?
Varun Alagh
Actually, the shares that we mentioned, is in bottles only, and this share that we talk about actually is in bottles because LUPs is not an area that we participate in. So that’s a share that we wanted to sort of talk about with.
Jitendra Arora
Okay. Thank you.
Operator
Thank you. We’ll take our next question from the line of Ishpriet Kor from Relax Capital. Please go-ahead.
Unidentified Participant
Hi, I just wanted to understand the advertising number that you share of INR766 crores. Is it possible to get a breakup between the spends online and offline? Hi. We do not share such breakups. And there is like actually there is no online or offline
Varun Alagh
Spends because these are A&P spends and a large part of our spends are in the digital mediums and some of course, with our customers and so this is the sum of all of that we talked about.
Unidentified Participant
So this also includes the discounts or the offers that are there on the product? Not really. The discounts and offers, etc., are net off from our revenue net of revenue and how is this number likely to be like going-forward? Is it going to be in-line with the revenue or lower-growth?
Varun Alagh
Like I mentioned, this is a bucket from which we see leverage in the coming years, right? And hence, we want to drive effectiveness and make sure that as percentage, it keeps going down over years.
Unidentified Participant
Okay. And is that a metric maybe for us to better understand as to the spends that we do on the digital marketing as to say how much is the spend and how much is the kind of sales? Is there any metric for us to better understand this?
Varun Alagh
Not really. We are investing in brand-building, which is a long-term investment to build these brands and awareness of these brands and that’s the core investment in this business and that’s what we are doing across our brands
Unidentified Participant
Ohh, sure, thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press on your phone now we’ll take our next question from the line of Chokalingam from ICICI Prudential Asset Management. Please go-ahead.
Unidentified Participant
Yeah, hi. Thanks for the opportunity. Varun, how are you all thinking at the Board level about dividends as a policy and how to balance because you guys are generating decent amount of cash flows. So how are you thinking about it?
Varun Alagh
Hi, hi,. So honestly, don’t have a definitive answer for you yet. And at this point of time, we would love to also find opportunities of allocating this cash and investment towards more growth opportunities. And of course, in due time, given the company will continue to generate cash and we will come together and deliberate on this and share a view as it forms and on how we would like to distribute that cash as business. Okay. Thank you you.
Operator
Thank you. We’ll take our next question from the line of Manoj Menon from ICICI Securities. Please go-ahead.
Manoj Menon
Hi, team. Three quick clarifications from my side. One, I’m sorry if I missed this in your earlier comment while I was listening, the online, offline piece of particularly in the offline, where were we currently? And just on the piece because that’s where we started-off with and the rest of the brands are right democra, etc., happening currently or rather in the last year or so. Just the online offline piece, some numbers I heard about, if I remember correctly, I think 70% is through dedicated distributors versus, I think 30-odd percent earlier, et-cetera. Just some of those journeys and how do we look at the milestones you have for the next 12 months on the offline distribution to begin with? That’s the first one.
Varun Alagh
Hi, Manoj. And so from a offline distribution perspective, and again our focus will continue to be on the focus categories that we’ve called out on business. In modern trade, these categories have already started showing good growth like we said, we are in double-digit growth in Q4 itself. In GT also, sequentially they are getting better and we’ll continue to track them sequentially and continue to build-on them kind of — and you know, every quarter the focus will be that we further enhance our distribution of these focus categories in both GT as well as drive double-digit growth initiatives. Is it — is it fair to, let’s say, make a statement of hypothesis that material part of incremental growth for Mamarth will now will actually come from offline. Adjusting for obviously, I’m not concerned too much about the one-offs for the next few quarters, maybe even for a year of the defocus etc, that’s a transition. Adjusting for that on a like-for-like basis, is it fair to say that for the Mamarth as a brand in totality, let’s say a significant portion, if I put a number there, let’s say, 80%, 90% of the incremental growth will come from the execution offline, particularly in GT, again like-for-like without — without taking, let’s say, a normalized growth for a GT — for an MT or an e-commerce. To be honest, Manoj, our objective would be that our three channels of focus in terms of growth are e-commerce, the GT and MD. We would like the focus categories to grow in double-digit across these three channels and not only one. And like we had highlighted and the investment allocation piece would not only deliver healthy growth in offline, but also help us deliver that growth in on e-commerce and which is also a sizable channel for the brand. And hence, I do believe that apart from offline, e-commerce also the focus categories will deliver double-digit growth going-forward?
Manoj Menon
Okay. Okay. Okay. Okay, fair enough. Secondly,, maybe just about a year back, you had let’s say, experimented with low unit price packs at the price point, let’s say, relevant for what stands for you know, let’s say, I think it’s close to 12 months now, if not longer. You know what’s been the, let’s say, learning from those experiments? Is it worth ramping-up or it’s not actually very healthy learning and a very relevant sort of question as well.
Varun Alagh
Like for example, to give you a reference in face washes and most of the brands which are bigger than us in terms of share today and the 50 ml to 100 ml ratio is skewed almost three times towards the 50 ml pack. While in our case, currently, the pack is actually smaller than 100 ml in the last one year and we have seen a very good traction on our execution on that pack. Of course, it got a little disturbed because of our execution breaking down because of GT changes, et-cetera. And now that we are back to that early traction in PMF is actually established, that’s actually the core focus area in terms of room in GT that we will be driving with and because we clearly see a lot of headroom in those small that we’ve launched and we’ll continue to double down on.
Manoj Menon
Understood. Can I take a few more questions? Is that okay? Should I need to get back-in the queue?
Varun Alagh
So please you can ask.
Manoj Menon
Okay. Sir, why don’t actually, let’s say, take, let’s say again, six to nine months back, you know, per the — there is one comment about, let’s say, the — in the learning cycle, the necessity to increase the salience of Europroducts for in offline. Are you — along with the segments you want to operate in, that’s probably a marketing decision. From a sales vector point-of-view, have you now, let’s say, are you clear about these are the, let’s say, hero SKUs for each of those segments in-market as we speak or is it still in an iterative mode.
Varun Alagh
Manish, like I mentioned, I think the where to play was the work that we were doing for the last six months and I think a lot of clarity has emerged, right, on that front. We are very clear about a few Hero skews, be it in face wash, be it in shampoo, be it in babyness, be it in moisturizers that we want to drive and build and some of them are already scaled and we are just doubling down in terms of growth and share on them and some others are very young and new that we have sort of introduced to get into a certain partition. Those will be build journeys and as well as within these categories, we have recognized a few partitions for the brand and where the brand currently is either not present or very weak and those are partitions where we will innovate with a billing mix and commit to building them over the next three to four years. So that’s how we see that.
Manoj Menon
Okay. My last two questions or clarifications. You know, any changes to the customer acquisition cost which you have to make in the last 12 months again on a like-for-like basis? And how do you see that — the reason I’m asking because the comment about, let’s say, 4Q FY ’26 margins is where it should be similar to FY ’24. I believe that you alluded to this because FY ’25 had one-offs. So adjusting for that probably it’s better. I’m just trying to understand is given that, let’s say, if you grow double-digits, there should be some leverage, we should also kick-in. Given that, let’s say within that, let’s say offline outpaces, let’s say, the other channels again or other GTU is what I mean in offline, again, it should also add to margins. So is there any changes to the CAC or let’s say, there is a willingness probably to spend more on the newer brands? How do I think about the margin algorithm here linked to CAC?.
Varun Alagh
So Manoj, we do not honestly think in terms of CAC because we are a fairly multichannel sort of brand strategy and we think more in terms of our brand awareness, reach and frequency for our brands and investing in brand growth. And of course, the reality has been that the younger brand have been growing faster and these are brands which do require higher spends because they are young, they are three to four years-old and hence the awareness is low. So that’s something that we are investing in-building and we will continue to invest and build. And even from a channel perspective, while GT, you know, continues to get better on the — but given our young brands are still 90% online, that growth is largely driven from online as a segment. Yes. So there the investment continues to be strong in terms of driving brand relevance. And if that’s how I would suggest you see. But yes, that’s an area which we do see leverage arising out of as a channel mix, brand mix as well as effectiveness sort of comes into play over years.
Manoj Menon
Okay. Understood. And lastly, a creditable performance team for, let’s say, improving working capital by about seven days, right? So a minus 11 to minus 18 is what I saw artically after the results came if I got into the call. If you could just talk about — in fact, it’s a very good performance given what has happened to the channel mix during the year and probably the other focus areas you might have as the top management. If you could help us understand what are those drivers which was — which let’s say the unlocks which helped you achieve this? And let’s say, how much more you could do to out in the medium-term, probably two to three years.
Varun Alagh
Hi, Rah this side, you’re asking about working capital efficiency, right? Yes, that’s right.
Manoj Menon
Yeah. So yeah, I think you know if from a cash generation perspective, I think Q4 obviously has been a good quarter for us, both from a profit perspective and also working capital implemented generation. And it’s a mix of, of course, you know-how our channels have scaled and also efficiencies from a receivable cycle and extending the payable cycle in some cases. So I think that’s — that has been a consistent focus for last three, four years and I think we’ve had some directional improvements there. And hence, what I see is that this is probably a trend which could you know which would sort of — it will not probably difficult to continue from here, we would want to retain the cash generation cycle at these levels as we move forward? Thank you so much. And all the optimization on the inventory side has happened during the quarter, which has led to better for us. Sure, sure. Thanks much.
Operator
Thank you. We’ll take our next question from the line of Nitin Gupta from MK. Please go-ahead.
Nitin Gupta
Yeah, thanks a lot for the opportunity. Just one question. How are we going to go about around 30% of your non-focus categories under Mamark.
Varun Alagh
Nitin, I think you know strategically where just you know activating them, serving them, being tactically present wherever the sort of be it in online or offline these categories exist and we don’t intend to invest marketing monies in them sort of that’s how we see it in terms of that cluster size also, we — we want that contribution to reduce from 30% to 15% and contribution of focus categories to increase significantly over the next two to three years, right? So I think new investment tactical availability and is the only thing that we expect to do on those.
Nitin Gupta
So this means like a gradual sort of reduction in the portfolio rather than roll-back of certain category offerings.
Ghazal Alagh
Yes, In fact, it’s not really roll-back right. I mean, to give you an example, a category like body lotions, right, which is a non-focus category right now. Now in-season because the brand has a natural traction and awareness and if we have relationships with our modern trade accounts enough, there is demand that comes in for that category. We just serve that demand I mean it won’t grow it. It might even sort of decline or stay where it is and due to which if the brand grows and it stays where it is, the contribution will keep sort of now going down. But it’s a category that will generate that gross margin which will — which we will invent — invest back-in the focus categories to win-back share and then I think that’s how we see some of that sure.
Nitin Gupta
This is very clear. Thank you.
Operator
Thank you. We’ll take our next question from the line of Modit Minoka from M3 Investment. Please go-ahead.
Mudit Minocha
Hi, great bounce-back from last quarter. Just a few questions. Wanted to ask what is your like next year growth revenue and EBITDA guidance and then I’ll go to next one, two years.
Varun Alagh
Honestly, we’re not sharing any guidance from a next year perspective.
Mudit Minocha
Right. So on the serum category, is the category still growing 30% plus? And how is our share shaping up? And do — how do you feel about serum category in next two, three, four years?
Varun Alagh
We’re actually pretty bullish about that category. We have talked about that category in one of our presentations in IBT as well. It’s still — we expect the category to grow at close to those 30% kind of numbers in the next year as well. And we want to make sure as a company, we gained share in that category and so we want to grow faster than that in the category and we will put all our sort of efforts. We’ve already launched a superior product portfolio to take on that category. Now it’s more about communicating with consumers and ensuring excellent execution to gain share in that right.
Mudit Minocha
So in your presentation, you have said that your secondaries have been good than primaries. And just wanted to understand from the new set of distributors that you have enrolled, how many of them have placed repeat purchases and how many of you are confident that these have built a decent franchise in the cities no,
Varun Alagh
I think that’s honestly a monthly exercise which sort of continues to happen the fact that our you know, overdue the, the fact that our secondaries continue to sort of climb and GT distribution continues to climb from a direct perspective and are all signals that these new partners are fairly strong and stable in helping us deliver our execution agenda. You know, from a perspective of quality, like we had sort of mentioned, I think 70% to 80% of our cells are in green in terms of the scorecard and quality that we expect from our partners and balances work-in progress that we will keep doing over the next few quarters.
Mudit Minocha
Great. On quick commerce, if you are tracking your market-share versus peers, is your market-share in Quick commerce per se better than the incumbents like the large ones. So to just directionally say that your presence in quick commerce is better or you’re able to crack this channel better. Any nuances that you have picked or your focus there?
Varun Alagh
Are actually goal as well as Northstar metric is more internal there and because it’s a new shaping channel and we wanted our shares to be higher than what our overall e-commerce shares are, and that’s the metric that we’re chasing. And in most of the categories, as we speak, our shares in QC are actually higher than our overall e-commerce shares. So that’s a healthy signs and because the channel grows, you know, our overall share will sort of grow faster and so that’s the metric that we are tracking in there.
Mudit Minocha
Okay. Great. And if you could also elaborate about the few experiments that you were trying in different geographies and any color that something is positively shaping up and that you want to take it to them in Japan country just for our understanding? That’s my last question.
Varun Alagh
Thanks. Like I mentioned, I think there are so many of them that we tried, I won’t be able to sort of share elaborate details. But the fact that you know where most of those were done — has seen certain green shoots in our core channels and focus categories and points to the fact that these experiments have been showing positive results. And some of the experiments still continue to be on. We will — we will learn from them over the next two to three months based on which, like I said, we will have a holistic effective how to play playbook that we will deploy in coming quarters to continue winning in the market.
Mudit Minocha
Thank you. Congratulations. Thanks for it.
Operator
Thank you. As there are no further questions, I now hand over the conference to management for closing comments. Over to you, sir. Thank you.
Varun Alagh
Thank you so much for all the interesting questions. Thank you.
Operator
[Operator Closing Remarks]