Buy Eureka Forbes; target of Rs 735: ICICI Securities

ICICI Securities research report on Eureka Forbes

Eureka has revamped its servicing business strategy and we believe its benefits are surfacing. These include: (1) It has, now, four different servicing plans with options to buy servicing for one, two or three years, instead of just one plan across consumers. (2) Rolled out an App that provides alerts to consumers about servicing. Billing/payment are online, and various checks are in place to reduce pilferage. (3) With digital investments, servicing costs are lower too. Eureka also offers 4% additional discount to consumers opting for requests via its App and (4) We believe, Eureka can invest the savings back into brand-building to drive revenue growth/market share.

Outlook

We stay constructive on Eureka given strong business tailwinds. Maintain BUY with a DCF-based revised TP of INR 735 (implied P/E of 73x/62x FY26E/FY27E EPS).