Target: ₹715

CMP: ₹565.60

FY25 was a stellar year for Eureka Forbes (EFL), visible from step-up in product business sales growth (+17 per cent ) with significant acceleration in electric water purifier sales (+18.1 per cent ), service business starting to see green shoots with efforts on AMC unit sales and improving customer experience yielding results, margin expansion, despite stepped-up brand investments (+25.5 per cent), led by better efficiencies/leverage benefit in staff cost, service charges, freight and IT expenses.

We like EFL’s growth story – execution so far has been impressive; a debt-free balance sheet, negative working capital and strong FCF generation provide comfort. With product business momentum sustaining, likely uptick in service business revenue over the next few quarters can lead to a further rerating.

Despite GM contracting by 80 bps (due to buyback, promotions), EBITDA margin expanded 182 bps y-o-y (+116 bps y-o-y exESOP) in FY25 through rigorous cost optimisation, even as the company stepped up brand investments to drive growth. Savings in service charges (down 150 bps as per cent to sales), staff costs (down 146 bps as per cent to sales), and productivity improvements provided headroom for higher A&P spends (+124 bps y-o-y as per cent to sales) while supporting overall margin expansion.

We believe benefits of digital-led efficiencies and disciplined cost control will enable EFL to sustain transformation journey with enhanced growth and profitability.

Published on August 29, 2025