Buy Eureka Forbes; target of Rs 660: ICICI Securities

ICICI Securities's research report on Eureka Forbes

Eureka Forbes reported strong set of numbers for 7th straight quarter. Eureka saw double-digit growth in the product business both in value and volume terms, despite a subdued demand backdrop. We note: (1) Water purifiers maintained double-digit momentum, aided by launch of 2x range across price points, widening its appeal to the broader customer base. (2) Vacuum cleaners too saw double-digit growth driven by innovative launches in the fast-growing robotics category. (3) Service business continued its momentum with double-digit growth in service bookings driven by better ASP and higher volumes. (4) Upcoming R&D centre, slated to be commissioned in Q3FY26, underscores the company’s focus on innovation. (5) We believe margin expansion is fuelled by not only operating leverage, but also cost-optimisation measures. With low category penetration, we see ample runaway for sustained, profitable growth.

Outlook

We model Eureka to report revenue and PAT CAGRs of 12.3% and 19.0%, respectively, over FY25–27E. Maintain BUY with a DCF-based revised TP of INR 660 (earlier INR 690; implied target P/E at 56x FY27E EPS).