Eureka Forbes Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Eureka Forbes reported resilient Q3 FY26 results with 8% YoY revenue growth and 57 bps EBITDA margin expansion, navigating a challenging macro environment marked by a post-festive slowdown and elevated trade inventories, particularly in e-commerce. While the Electric Water Purifier segment was softer, emerging categories like Robotics and Air Purifiers delivered strong growth, and the company gained market share in Water Purifiers. Management views the Q3 slowdown as a temporary aberration and remains confident in its long-term ambition of 2x revenue and 3x EBITDA by FY30, driven by strategic investments in category expansion, innovation, and service.

Highlights

  • Revenue of ₹645.4 crores, up 8% YoY, demonstrating resilient performance in a challenging macro environment.

  • Adjusted EBITDA margin expanded by 57 bps YoY to 11.3%, driven by the COGS program and favorable channel mix.

  • Emerging categories like Robotics, Air Purifiers (3x growth), and Water Softeners showed strong momentum and healthy growth.

  • AMC bookings continued its strong trajectory, marking the third consecutive quarter of double-digit growth.

  • The company gained market share in the Water Purifier segment both sequentially and year-on-year, despite a softer category environment.

Concerns

  • Q3 witnessed macro challenges on the consumer demand front, leading to a slowdown post the festive period.

  • Elevated trade inventories, particularly in the e-commerce channel and the Electric Water Purifier category, weighed on growth.

  • A one-time pre-tax charge of ₹40.4 crores related to new labor codes was reported as an exceptional expense.

Key financials

2 periods

Headline

  • Revenue
    ₹645.4 Cr
    YoY +8%
  • Adjusted EBITDA Margin
    11.3%
  • Adjusted PBT Growth
    11.3%
  • Pre-exceptional PAT
    ₹39 Cr
    YoY +11.9%
  • Gross Margins
    60.8%
  • YTD FY26 Revenue
    ₹2,026.6 Cr
    YoY +11.1%
  • YTD FY26 Adjusted EBITDA Margin
    11.9%
  • YTD FY26 Adjusted PBT
    ₹204.8 Cr
    YoY +22%

9M

  • PAT (pre labor code impact)
    ₹139.1 Cr
    YoY +24%
  • Gross Margins
    58.8%

What they filed

Q1 FY27: revenue up 15.3%, net profit up 41.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue673 598 613 608 773 +15%645 +8%684 +12%701 +15%
EBITDA72 59 78 61 96 +33%67 +14%85 +9%67 +10%
Net profit47 35 51 39 62 +32%9 −74%51 +0%55 +41%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹60 Cr
    So just to give a sense, our YTD FY26 capex this year is running close to INR 60 crores. And we've given out a guidance that we intend to keep our capex in the range of INR 60 crores to INR 70 crores.
  • Liquidity Liquidity disclosed Company is building cash balance and is open to inorganic growth opportunities.
    Having said that, equally, with the cash balance, we are also looking at areas, and that will all be subject to Board approval, whether there is some way to reward the shareholders. So, all those options are ongoing items of discussion. But our strong and disproportionate focus and bias would be towards investing the cash for growth.

Guidance & targets

Revenue Growth

  • Q4 Revenue Growth Revenue Growth · Q4 FY26 · High confidence ahead of YTD FY26 growth
    We believe that with all the plans that we've got in motion, our Q4 growth will be ahead of the YTD FY26 growth that we've delivered, which is of 11.1%.

    — Pratik Pota

Long-Term Ambition

  • Revenue Growth Long-Term Ambition · by FY30 · High confidence 2x
    In summary, our overall business remains on a firm footing. The breadth of our performance across categories, along with the year-on-year margin expansion gives us the confidence to achieve and to aim for a longer-term ambition of achieving 2x revenue and 3x EBITDA by FY30.

    — Pratik Pota

  • EBITDA Growth Long-Term Ambition · by FY30 · High confidence 3x

    — Pratik Pota

Category Size

  • Robotics Category Value Category Size · by FY30 · High confidence ₹1,000 crores
    And in the Investor Day, if you recall, we had talked about Robotics being INR 1,000 crores category by FY30. That momentum continues.

    — Pratik Pota

Capex

  • FY26 Capex Capex · FY26 · High confidence ₹60-70 crores
    And we've given out a guidance that we intend to keep our capex in the range of INR 60 crores to INR 70 crores.

    — Gaurav Khandelwal

Service

  • Non-AMC Service Impact Service · from Q2 of next year onwards · Medium confidence start having some impact
    You may have seen some of our advertising campaigns in the print and the digital media. As you can imagine that this behavior change will take time. This is a very large market, a well-entrenched behaviour and therefore, we expect this to start having some impact from Q2 of next year onwards.

    — Pratik Pota

Profitability

  • Gross Margins Profitability · ongoing · High confidence range-bound

    From 61% today

    But stepping back, I think what can be assumed is that we will keep our gross margins at a range-bound level. We do not expect to keep our gross margins at a level of 61% that you would have seen in this quarter.

    — Gaurav Khandelwal

What to watch in Q4 FY26

Q4 Revenue Growth vs. YTD FY26

next quarter
Current YTD FY26 growth of 11.1%
Target Q4 growth ahead of 11.1%

Why it matters

To verify management's confidence that Q3 was a one-off aberration and growth trajectory normalizes.

We believe that with all the plans that we've got in motion, our Q4 growth will be ahead of the YTD FY26 growth that we've delivered, which is of 11.1%.

Risks & concerns

  • Macroeconomic slowdown and consumer demand weakness

    medium

    Q3 witnessed macro challenges on the consumer demand front and a slowdown post the festive period, impacting growth.

    Management acknowledged

  • Elevated trade inventories, especially in e-commerce

    medium

    Elevated trade inventories, most pronounced in the e-commerce channel and Water Purifier category, weighed on growth, though expected to normalize by quarter-end.

    Management acknowledged

  • Softer performance in Electric Water Purifier segment

    low

    The Electric Water Purifier segment experienced a softer quarter due to lower post-festive demand, though the company gained market share.

    Management acknowledged

  • Increased competition in growing market segments

    low

    As TAM increases due to factors like water contamination and air pollution, more competitive activity is expected, but management is confident in its 'right-to-win'.

    Analyst acknowledged

Q&A highlights

7 direct
Q3 slowdown and Q4 growth outlook Direct
Q3 was clearly a one-time aberration on account of very temporary channel-specific issues leading from the unexpected, unanticipated post-festive slowdown. This impact was mostly, and the most pronounced actually in the e-commerce channel. I think that is, by and large, behind us in the offline channels and would get behind us in e-commerce by the end of this quarter.

Clarifies management's view on the Q3 performance as an isolated event and provides confidence for a stronger Q4.

Asked by Keshav Lahoti

Gross margin drivers and other expense increases Direct
I think the big impact that has played out on gross margin is the COGS program. The effect of that is definitely there in the economy segment as well... On the question of other expenses, yes, even the lines other than the A&SP line, they have shown an increase, and that is largely driven by the fact that we have, given the headroom that we saw, which was coming because of gross margins, there were certain capability projects that we've done specifically in the areas of supply chain and IT, and that is a cost that has been incurred as far as other expenses is concerned.

Explains the specific factors contributing to gross margin expansion and the nature of increased other expenses as non-structural capability investments.

Asked by Siddhartha Bera

Channel inventory levels and Q4 impact Direct
We see inventory levels normalizing in the offline channel already and expect that to happen in the e-com channel within this quarter.

Provides a clear timeline for the resolution of elevated inventory, a key concern from Q3.

Asked by Renu Baid

Impact of new players and e-commerce channel issues on Water Purifiers Direct
I think, like I said in my opening remarks, we have gained market share in the Water Purifier segment, both sequentially and year-on-year... In e-commerce, we had a challenge stemming from what I said earlier, which is that there was a clear slowdown in offtakes post-festive and a very clear slowdown in traffic on a particular platform.

Addresses concerns about competition and clarifies that market share was gained despite e-commerce specific challenges, not due to new players.

Asked by Umang Mehta

Strategy for growing TAM and competition in Water Purifiers Direct
But as India's largest and strongest brand and the brand with the largest service network, with a proven track record of delivering innovations, with a very, very comprehensive and omnichannel go-to-market, we have the strongest right-to-win in this segment.

Highlights management's confidence in its competitive advantage and strategy to capitalize on the growing market for water purifiers.

Asked by Aniruddha Joshi

Correlation between service charges and service bookings growth Partial
Service charge has 2 components. There is one part which is linked to revenue because there is, basis the revenue that is generated, there is a certain percentage that is paid out. Equally, there is a part which is not linked to revenue... And hence, it is that part which causes a bit of a disconnect and a perfect correlation with revenue.

Explains why service charges are not a perfect leading indicator for service bookings, providing nuance to a key operational metric.

Asked by Priyansh Gopawat

Long-term guidance (2x revenue, 3x EBITDA by FY30) status Direct
Achal, that longer term guidance stays absolutely unchanged. We have, notwithstanding the quarter that's just gone by, we have complete conviction. And we believe that we are well on track to deliver to the ambition that we've outlined, which is of 2x the Revenue and 3x of the EBITDA.

Reaffirms the company's ambitious long-term targets despite the Q3 slowdown, signaling strong management confidence.

Asked by Achal Lohade

Deployment of growing cash balance for inorganic growth Direct
With an increasing cash balance, we are very open to looking at any inorganic growth opportunities that might come our way. As you can imagine, they are hard to come by and not easy. But our intent is to use this growing cash that we have to invest in growing the business and specifically through inorganic, if possible.

Indicates a strategic focus on M&A as a potential avenue for growth, leveraging the company's increasing liquidity.

Asked by Deepak Kumar

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance and Macro Challenges

Eureka Forbes reported a resilient Q3 FY26 with revenues growing 8% year-on-year to ₹645.4 crores, and adjusted EBITDA margin expanding by 57 basis points to 11.3%. However, the quarter faced macro challenges, including a post-festive slowdown that led to elevated trade inventories, particularly impacting the e-commerce channel and the Electric Water Purifier category. Management clarified that the Q3 slowdown was a 'one-off aberration' and expects growth to normalize from Q4 onwards, with Q4 growth projected to be ahead of the YTD FY26 growth of 11.1%.

Strategic Growth Levers and Category Performance

The company highlighted a successful transition from a single-category product business to one with multiple growth levers. Emerging categories such as Robotics continued their strong trajectory, and Air Purifiers delivered a 'breakout performance' in Q3, growing 3x, albeit from a low base. Water Softeners also performed well with healthy growth. In the core Water Purifier segment, Eureka Forbes gained market share both sequentially and year-on-year, despite a softer overall category, demonstrating the strength of its brand and comprehensive go-to-market strategy.

Profitability and Cost Management

Gross margins expanded significantly by 331 basis points year-on-year to 60.8% in Q3, primarily driven by the company's COGS program and favorable quarter-specific issues like channel mix and lower discounts. The COGS program is now institutionalized, creating headroom for growth investments. Despite a 23.3% year-on-year increase in A&SP (Advertising & Sales Promotion) spends aimed at category expansion, the company achieved a 57 bps EBITDA margin expansion, reflecting effective cost management and strategic investment.

Service Segment Initiatives and Customer Experience

The service segment demonstrated strong performance, with AMC bookings continuing their double-digit growth trajectory for the third consecutive quarter. Eureka Forbes has rolled out new programs to appropriate a larger share of the filter's aftermarket, including a simplified assortment of filters, attractive pricing, and engagement programs for technicians and distributors. Customer experience KPIs have witnessed a sharp improvement, reaching an all-time high, with the highest-ever 24-hour complaints TAT resolution and a high percentage of complaints met within one hour.

Outlook and Long-Term Ambitions

Management reiterated its confidence in achieving its long-term ambition of 2x revenue and 3x EBITDA by FY30, stating that the Q3 slowdown was a temporary aberration. The company believes that the relevance of its categories, such as water and air purifiers, has never been more salient, driven by growing awareness of water contamination and poor air quality. Eureka Forbes plans to continue investing in category growth through penetration and premiumization, differentiated innovations, and strengthening its service network, while also exploring inorganic growth opportunities with its growing cash balance.

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