However, a wider distribution needs to be backed by higher consumer demand. HDFC’s checks indicate that retail margins, including schemes, are in the 27-35% range, versus base margins of 15-23%. Higher trade incentives help drive offtake and support distribution expansion, but they also increase the cost of converting availability into sales. So, if Honasa increases advertising, trade schemes or promotions to maintain the current pace of growth, some of the operating leverage expected in FY27 could be absorbed by these costs.
