Eureka Forbes

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%.

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.

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.

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.

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.