Eureka Forbes Limited

Despite a challenging external environment with soft consumer demand and trade working capital pressure, Eureka Forbes delivered a 9.9% revenue growth in Q1 FY26, reaching ₹607.7 crores. This growth was primarily driven by a double-digit increase in the products business, with PAT growing by 24.1% year-over-year to ₹38.5 crores. Adjusted EBITDA margins stood at 11%, reflecting higher service charge payouts and growth investments, while adjusted PBT grew by 14.2%.

The company achieved double-digit volume growth in both its key categories, EWPs (Water Purifiers) and VCs (Vacuum Cleaners). The economy range of EWPs continued strong growth, and innovations like 2-year filter life products are expected to drive penetration by lowering lifetime ownership costs. The robotics segment within vacuum cleaners saw significant growth of 52%, contributing to the overall strong double-digit growth in the VC category, with new products like SmartClean Home Mapping Turbo being rolled out.

A significant turnaround was observed in the service business, with healthy double-digit growth in fresh service bookings, both in volume and value. This was supported by initiatives such as segmented AMC offerings, a strong D2C engine for AMCs (nearly 2/3rd bought digitally), and strengthened engagement with technicians. The company expects this momentum in service bookings to sustain, with the impact on reported revenues anticipated from Q4 FY26 as the lag due to service amortization reduces.

Gross margins for Q1 FY26 were 59.7%, a slight decrease from 60.5% in the previous year, attributed to tactical promotions in a competitive market. Despite this, management aims to maintain gross margins within a range and achieve full-year margin improvement. The adjusted EBITDA margin of 11% was achieved after accounting for higher service charge payouts (up 17.6%) and increased growth investments, with employee expenses growing 7% and other expenses 6.1%.

The water purifier category in India has a low penetration of about 6%, with urban penetration at 12% and rural at 3%. Management believes that by addressing barriers like high upfront cost and high cost of ownership (through products like the 2-year filter life purifiers), the market can significantly expand. The company's installed base for water purifiers is approximately 14 million customers, with a large untapped potential for service offerings within this base, as only a small proportion currently avail organized services.

The market has seen increased competitive activity with new players and scaled-up presences, which Eureka Forbes views as a positive development for category awareness. Despite the heightened competition, the company stated that its market share has remained unchanged, and it continues to be aggressive in its response through activation and innovation efforts across all channels. Management emphasized its balanced portfolio across price points and propositions to maintain its competitive edge.