Whalesbook
📉 The Financial Deep Dive
The Numbers:
Eureka Forbes Limited announced its financial results for Q3 FY26, showcasing a mixed performance. Revenue from operations saw a healthy 8.0% year-on-year (YoY) growth, reaching Rs. 645.4 Cr. Underlying operational profitability also improved, with Adjusted EBITDA increasing by 13.7% YoY to Rs. 73.2 Cr. This was accompanied by an expansion in the Adjusted EBITDA margin by 57 basis points YoY to 11.3%, driven by strong gross margins. Adjusted Profit Before Tax (PBT) before exceptional items and ESOPs climbed 11.3% YoY to Rs. 58.5 Cr, and Adjusted Profit After Tax (PAT) before exceptional items rose by 11.9% YoY to Rs. 39.0 Cr.
However, the reported PAT for the quarter stood at Rs. 9.0 Cr, marking a significant decline of 74.2% YoY. This sharp drop is primarily attributed to a one-time exceptional item of Rs. 40.4 Cr (pre-tax) related to the implementation of new Labour Codes. For the nine months ended December 31, 2025 (9M FY26), revenue grew 11.1% YoY to Rs. 2,026.6 Cr, Adjusted EBITDA increased 17.7% YoY to Rs. 241.7 Cr with margin improving by 67 basis points YoY to 11.9%, and Reported PAT was Rs. 109.1 Cr, a decrease of 3.0% YoY.
The Quality & The Grill:
While adjusted operational metrics demonstrate resilience and growth, the substantial exceptional item significantly impacted the reported PAT, masking the underlying operational strength. The company experienced challenges in its Water Purifier portfolio due to elevated channel inventory and a post-festive season slowdown, although management claims market share gains within the category. Conversely, the Robotics segment reported strong growth, and Air Purifiers saw a 3x YoY revenue increase. The Service business continued its positive trajectory with its third consecutive quarter of double-digit growth in AMC bookings.
Financial Health & Outlook:
Financially, Eureka Forbes achieved a record Net Surplus of Rs. 300 Cr for the first time. Return on Capital Employed (ROCE) remained exceptionally strong at over 350%. Capital expenditure for 9M FY26 was Rs. 63 Cr. The company's credit profile was bolstered with an upgrade by CARE to 'AA; Stable' and a revised outlook by CRISIL to 'AA-; Positive'.
Management expressed confidence in its long-term transformation strategy, aiming for over 2x revenue and over 3x EBITDA in the next five years, projecting Rs. 5,400-5,600 Cr in revenue and Rs. 800-850 Cr in Adjusted EBITDA by FY30. Macro factors like urbanization and rising incomes are seen as supportive tailwinds. The company is re-imagining itself as a D2C Health and Hygiene Tech Leader, underscored by the launch of a premium water purifier, Aquaguard Arctic Blaze, priced at Rs. 79,999.