Eureka Forbes reported 15.3% revenue growth to Rs 700.8 crore in the first quarter of FY27, driven by strong demand for water purifiers. While Nomura maintains a positive view, the brokerage adjusted its target price to Rs 572 due to margin pressures and valuation changes.
Eureka Forbes has reported a robust start to the financial year, with revenue growing 15.3% year-on-year to Rs 700.8 crore in the first quarter of FY27. The company's performance was led by strong volume growth in its core water purifier business, alongside success in newer categories like robotics and air purifiers. Following these results, investment firm Nomura has reiterated its positive outlook on the stock, though it has revised its target price to Rs 572 from the previous Rs 600.
Operational Performance and Margin Pressures
While the top-line growth met expectations, profit margins remained a point of focus for the market. The company’s adjusted EBITDA margin for the quarter was 10.5%. This slight moderation in margins is largely attributed to higher spending on advertising and sales promotion (A&SP) to drive brand visibility, combined with the impact of commodity inflation affecting raw material costs.
Nomura's decision to adjust the target price reflects a combination of a valuation roll-forward to September 2027 and a downward revision in margin estimates for FY27 and FY28 by 30 to 50 basis points. Despite this, the brokerage continues to see long-term potential in the company’s ability to premiumize its product portfolio, where consumers are increasingly opting for higher-end models like robotic vacuum cleaners.
Growth Drivers and Strategic Focus
Eureka Forbes is betting on a broader product mix to sustain its growth momentum. The company has seen encouraging uptake in its emerging categories, which include robotics and home air quality solutions. Management has been actively pushing these products to reduce dependence on single-product cycles. Additionally, the service business remains a critical pillar for the company, providing steady recurring revenue, although the firm has implemented price increases ranging from 3% to 12% across its various service plans, which has led to some moderation in that segment's growth.
Investor Monitorables
Looking ahead, investors may track how the company manages its operating margins in the second half of the year. The management has guided for flat year-on-year EBITDA margins, with plans to improve profitability through cost-reduction initiatives and better operating leverage as volumes scale.
Key risks that could impact future performance include high competitive intensity in the health and hygiene sector, which could limit pricing power, and potential volatility in input costs. Furthermore, the effectiveness of the company’s increased marketing spend in converting demand into profitable sales will be a critical factor for the coming quarters. Investors should observe whether the company can successfully scale its emerging categories while protecting its core business margins from further inflationary pressure.