Eureka Forbes Limited

Eureka Forbes reported a robust Q3 FY25 with revenues reaching ₹597.8 crores, marking an 11% year-on-year growth, or 11.3% excluding discontinued operations. This represents the fifth consecutive quarter of double-digit growth for the continuing business, primarily driven by a mid-teen growth in the product segment. Adjusted EBITDA margin expanded by 94 basis points to 10.8%, and Profit After Tax (PAT) surged by 53.6% year-on-year to ₹34.8 crores, despite a 19% increase in advertising and sales promotion spends.

The company emphasized innovation as a key factor for its growth, particularly in premium products. New launches like the Blaze Insta hot water purifier and Designo NXT Under-The-Counter water purifier have become market leaders in their segments. Towards the end of Q3, Eureka Forbes launched India's first truly smart water purifier, the Aquaguard Ritz Pro with IoT, aiming to enhance customer engagement and drive product integration into daily life. This focus on innovation is expected to continue driving growth in the premium portfolio.

Growth was broad-based across all channels, with e-commerce showing particularly strong growth, followed by direct sales. The retail segment experienced muted growth post the festive period. In the cleaning segment, robotic vacuum cleaners like Forbes Smartclean Pro and Forbes Robo Vac N Mop Easy were key growth engines. The air purifier business saw significant traction, growing 3x year-on-year in the seasonally critical Q3, although it remains North-centric with expectations for future geographical diversification.

While customer service KPIs showed significant improvement in Q3 due to technology investments and organizational focus, service revenue growth underperformed product growth. The tiered AMC structure launched earlier successfully drove volume growth and AMC adoption, though it led to some ASP dilution. Management expects service revenue to gain momentum as various initiatives, including managing the unorganized market and reducing leakages, begin to yield results. The company is committed to its journey of customer centricity.

The improved profitability, with EBITDA margin expansion, was attributed to operating leverage and cost efficiencies. Gross margins stood at 57.5%, an increase of 125 basis points sequentially but a decrease of 142 basis points year-on-year due to consumer offers and channel mix. The company's credit rating was upgraded to AA- Stable by CARE, reflecting improved financial health and marking the third upgrade in the last two years. Non-cash ESOP charges were ₹5.7 crores, similar to Q2, and are expected to stabilize at these levels.

Despite soft demand conditions, Eureka Forbes remains focused on driving growth through sustained investments in penetration, innovation, customer experience, digitization, and cost efficiencies. The company aims to continue expanding profitability and margins, leveraging its omnichannel presence and strong direct sales network to drive customer lifetime value and cross-selling opportunities. Management expressed confidence in driving sustained and profitable growth in the periods ahead, with significant headroom for further margin improvement.