Buy Eureka Forbes; target of Rs 700: ICICI Securities

ICICI Securities is bullish on Eureka Forbes recommended buy rating on the stock with a target price of Rs 700 in its research report dated September 30, 2023.

Broker Research

October 03, 2023 / 19:17 IST

Buy

26 Aug, 2025 12:21

Volume

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ICICI Securities research report on Eureka Forbes

Eureka scores well on important parameters to be a structural compounder. It has (1) established brands like Eureka Forbes, Aquaguard and Select, (2) multi-channel presence with access to 20,000 GT outlets and 10,000+ pin codes, (3) large product portfolio to cater to consumer needs like storage, hot water, copper/zinc benefits and non-electric water purifier and (4) strong RoIC (Exhibit:1). It is investing to expand margins (10% in Q1FY24) which we believe will likely release resources for growth. Launch of a variant at entry price point of INR 6,499 will lead to consumer trials. Distribution expansion and focus on services also offer growth and margin tailwinds. Worsening air and water pollution levels in India, limited presence of MNC brands and failure of new entrants to gain 5%+ market shares provide it a competitive edge. Induction of Pratik Pota (MD & CEO), Gaurav Khandelwal (CFO) and senior industry personnel has expanded management bandwidth; Initiate with BUY.

Outlook

We have valued the company as per DCF based methodology. We model the company to generate revenue and PAT CAGR of 12% and 50%, respectively over FY23-26. We also model the company to steadily improve the return ratios over FY23-26. At our DCF based target price of INR 700, the implied P/E of FY26E works out to 71x.

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