Eureka Forbes Limited — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

Eureka Forbes reported strong Q4 and FY25 results, with full-year revenue for continuing businesses growing 12% to ₹2,436.1 crores, driven by high-teens product portfolio growth. Adjusted EBITDA margins expanded significantly to 11.7% for FY25 and 13% for Q4, reflecting operating leverage and cost optimization despite increased A&SP spends. The company is focused on product innovation, service improvements, and addressing legacy costs, while also managing an inventory write-off of ₹7.9 crores in Q4.

Highlights

  • Full year revenue for continuing business grew 12% to ₹2,436.1 crores, up from 7.9% in FY24.

  • Product portfolio grew in high-teens for FY25.

  • Q4 revenue grew 10.8% (10.9% for continuing businesses) to ₹612.5 crores.

  • Adjusted EBITDA margin for FY25 reached 11.7%, an expansion of 136 basis points over FY24.

  • Adjusted EBITDA margin for Q4 FY25 reached 13%, up 183 basis points over last year.

  • Net surplus at year-end was ₹284 crores.

  • Service business saw volumes expand on unit AMC sales in FY25.

Concerns

  • Service business trailed product business in FY25, though green shoots are now visible.

  • Inventory write-off of ₹7.9 crores incurred in Q4 FY25.

  • Legacy costs (IT, COGS) are being addressed but still require focus.

Key financials

  1. Revenue (Continuing Business) FY25 ₹2,436.1 Cr +12%YoY
  2. Adjusted EBITDA Margin FY25 11.7%
  3. Adjusted PBT FY25 ₹235.9 Cr +37.1%YoY
  4. PAT (Adjusted) FY25 — +48.3%YoY
  5. Net Surplus FY25 ₹284 Cr
  6. Revenue (Continuing Business) Q4 FY25 ₹612.5 Cr +10.9%YoY
  7. Adjusted EBITDA Margin Q4 FY25 13%
  8. PAT (Adjusted) Q4 FY25 — +33.3%YoY

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
  • Liquidity Cash ₹284 Cr Net surplus at year-end, excluding lease liability, was ₹284 crores.
    Our net surplus at year-end, excluding lease liability, was Rs. 284 crores.

Guidance & targets

Volume

  • Product Growth Levels Volume · ongoing · Medium confidence mid to high-teens
    we expect the product growth levels to sustain at mid to high-teens.

    — Pratik Pota

  • Robotics Segment Growth Volume · next few years · High confidence 75-110%
    we expect that rate to be in the same ballpark of between 75%, 80% to 100%, 110% in the next few years as well.

    — Pratik Pota

Advertising & Promotion

  • A&SP Spends Advertising & Promotion · ongoing · Medium confidence sustain
    our spends and our investments in advertising and promotion, will sustain as we grow our categories and grow our business.

    — Pratik Pota

Margin

  • YoY Margin Expansion Margin · ongoing · Medium confidence continue to deliver
    we will continue to deliver a YoY margin expansion.

    — Pratik Pota

Market Size

  • Vacuum Cleaner Market Size Market Size · FY26 · High confidence 2028 forecast by FY26

    Previously 2028 → 2028 forecast by FY26

    in vacuum cleaner, what the study forecast as a market size for 2028 will now be happening in FY26.

    — Pratik Pota

What to watch in Q1 FY26

Service Revenue Growth Acceleration

next quarter
Current Green shoots and clear evidence of revenue growth coming by as well.
Target Continued acceleration in service revenue growth.

Why it matters

Service business has trailed product growth; its acceleration is key for overall sustained growth and improved profitability.

So, product business has had strong and sustained growth. Service business, we are now seeing a clear green shoot and clear evidence of revenue growth coming by as well.

Risks & concerns

  • Challenging market conditions

    medium

    The company reported growth in 'relatively challenging market conditions'.

    Management acknowledged

  • Service failure moments

    medium

    While overall NPS is high, managing individual 'moments of failure' in service is an ongoing challenge.

    Management acknowledged

  • Competition from other global players and new brands

    medium

    Heightened competitive activity, especially in water, but management believes it benefits category growth and Eureka Forbes is well-positioned as a market leader.

    Management acknowledged

  • Third-party service providers

    medium

    Issue of third-party service providers is being addressed through call masking, restricted partner access, tiered AMCs, QR code filters, and consumer communication.

    Management acknowledged

Q&A highlights

8 direct
Growth rate acceleration to mid/high-teens for the industry and Eureka Forbes Direct
in this quarter, we delivered a low double-digit growth but for the sixth consecutive quarter, we delivered that. We've now had six consecutive quarters also of mid to high-teens product growth.

Clarifies the company's consistent double-digit growth and high-teens product growth, addressing the analyst's concern about overall low double-digit growth.

Asked by Aniruddha Joshi

Company's focus on margins vs. market share/revenue Direct
Our approach remains consistent, remains unchanged. We know that we are a growth business, and we will continue to invest in drivers of growth.

Reaffirms the company's primary strategic focus on growth, with margin improvement being a consequence of cost management and operating leverage, not a trade-off.

Asked by Aniruddha Joshi

Assumption of service revenue decline in mid to high-teens Direct
Our service business did not decline, just to repeat that point. And we are now seeing the impact of our interventions, beginning to bear fruit.

Corrects the analyst's assumption, clarifying that service revenue did not decline and is showing positive signs of growth due to recent interventions.

Asked by Aniruddha Joshi

Product plan for next year, new areas, and growth momentum Direct
The first theme for water remains penetration and remains driving down the total cost of ownership... The second big vector is going to be on cleaning... specifically is robotics.

Provides a clear strategic roadmap for product development and growth drivers in key categories (water and cleaning, especially robotics).

Asked by Siddhartha Bera

Sustainability of A&SP spend pace given increasing size Direct
our spends and our investments in advertising and promotion, will sustain as we grow our categories and grow our business.

Indicates continued high investment in advertising and promotion, signaling management's commitment to brand building and category creation despite increasing company size.

Asked by Siddhartha Bera

Service level dissatisfaction and steps for improvement in the next financial year Direct
even as we improve the average customer SAT score, we are now pursuing movements of service failure and how do we salvage those moments of failure.

Acknowledges the ongoing challenge of service quality and details specific technological and operational interventions (e.g., new technician app) to address 'moments of failure'.

Asked by Naushad Chaudhry

Potential size and growth levers for the vacuum cleaner business in the next 3-4 years Direct
Robotics as a segment has been growing by 100% YoY for the last 3 years or more and we expect that rate to be in the same ballpark of between 75%, 80% to 100%, 110% in the next few years as well.

Highlights the significant growth potential of the vacuum cleaner segment, particularly robotics, and the strategy to expand its reach from online to offline channels.

Asked by Naushad Chaudhry

Interventions to reduce the cost of ownership for water purifiers, especially filter replacement costs Direct
The product that was launched online last year was called Aura 2x and what has been rolled out in modern trade and retail is a product called Aquaguard Enhance NXT, both of them have a 2-year filter life, in other words, filters need to be changed only after 2 years.

Details specific product innovations aimed at reducing the total cost of ownership for consumers, which is a key barrier to penetration in the water purifier category.

Asked by Shrinarayan Mishra

3 min read 6 chapters

Detailed narrative

Robust FY25 Performance and Margin Expansion

Eureka Forbes delivered a strong financial performance in FY25, with revenue for its continuing business growing 12% to ₹2,436.1 crores, a significant acceleration from 7.9% in FY24. This growth was broad-based and underpinned by a high-teens increase in the product portfolio. The company achieved an Adjusted EBITDA margin of 11.7% for FY25, an expansion of 136 basis points over FY24, and a Q4 Adjusted EBITDA margin of 13%, up 183 basis points YoY. This margin improvement was driven by operating leverage and a structured cost optimization program, despite a 25% increase in advertising and promotion expenses.

Product Innovation and Portfolio Expansion

Innovation remained a key growth driver, with Eureka Forbes launching over 30 new products across water, cleaning, and air segments in FY25. These launches included several industry-first products and contributed to the high-teens growth in the product business. The company is strategically focusing on its cleaning portfolio, particularly robotics, which has seen 100% YoY growth for the past three years and is projected to continue growing at 75-110% in the coming years. The aim is to expand robotics' reach from online to offline channels, leveraging the company's strong distribution network.

Service Business Turnaround and Customer Experience Focus

While the service business had previously trailed product growth, management reported 'green shoots' in FY25, with volumes expanding on unit AMC sales. Interventions such as tiered AMC offerings, D2C investments, and digitalization have improved service quality metrics to lifetime highs. A new technician app, launched approximately three months prior, ensures that pending complaints are resolved before new calls are attended, demonstrating a commitment to improving customer experience and driving service revenue growth.

Strategic Emphasis on Growth and Affordability

Eureka Forbes maintains a clear strategic bias towards sustained profitable growth, capitalizing on low category penetration and increasing consumer awareness of health and hygiene. A key focus is on reducing the total cost of ownership for water purifiers to drive penetration and market size expansion. New products like Aura 2x and Aquaguard Enhance NXT, offering a 2-year filter life, are examples of initiatives aimed at making products more affordable and attractive to non-users.

Addressing Legacy Costs and Competitive Dynamics

The company is actively working on institutionalizing cost management programs, including addressing legacy IT costs and optimizing COGS. Management acknowledges a competitive landscape with heightened activity from new brands and global players but views this as beneficial for overall category growth. Eureka Forbes believes its comprehensive product portfolio, spanning all price segments, positions it strongly to maintain market leadership and benefit from the growing market.

Continued Investment in Advertising and Brand Building

Advertising and promotion (A&SP) expenses increased by 25% YoY, representing a 121 basis point higher investment in FY25. The company plans to sustain these elevated investment levels to create greater brand awareness and drive category growth, particularly for its cleaning portfolio. The recent signing of Shraddha Kapoor as a brand ambassador for vacuum cleaners aims to further boost visibility and salience, especially for robotics, aligning with the strategy to grow the overall business.

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