Eureka Forbes Ltd. delivered impressive financial results for the first quarter of fiscal 2026-27, with consolidated net profit surging 47.3% to ₹56.98 crore compared to ₹38.68 crore in the corresponding period last year. According to the company's exchange filing, this significant profit increase was primarily attributed to a one-time gain of ₹19.5 crore during the quarter, which included an exceptional gain related to the reversal of gratuity expenses following amendments to the company's gratuity scheme. The company's revenue performance also showed strong momentum, rising 15.2% to ₹700.40 crore compared to ₹607.87 crore in the year-ago period. Adjusted PAT stood at ₹474 million, up 7% year-on-year, while net cash stood at ₹4.3 billion, demonstrating strong balance sheet health.
The company reported its highest-ever revenue growth of 15.3% year-on-year, reaching ₹700.8 crore for the quarter ended June 30, 2026. This record performance was driven by double-digit volume growth and pricing power in its core Water Purifiers segment, alongside sustained momentum in emerging categories such as Robotics, Air Purifiers, and Water Softeners. Water purifier revenues grew in the high-teens percentage range, supported by double-digit volume growth and price hikes, while the Product business saw late-teens growth, led by Water Purifiers which benefited from both volume expansion and price increases. Revenue acceleration was broad-based across channels, with the company launching an aggressive multi-media campaign to drive awareness of genuine Aquaguard filters, aiming to accelerate adoption rates. On a standalone basis, standalone basic earnings per share (EPS) rose to ₹2.85 from ₹1.98 in the corresponding period last year.
While operational metrics demonstrated solid performance, EBITDA margins contracted to 9.9% from 10.12% on a year-on-year basis, indicating some pressure on operational efficiency despite strong top-line growth. This margin compression was primarily due to a 131 basis point decline in gross margins caused by commodity inflation, as well as higher Advertising and Sales Promotion (A&SP) spends. Management noted that operating leverage was largely influenced by employee costs and other expenses, excluding A&SP investments which were accelerated to strengthen in-store presence in modern retail. The divergence between headline profit growth and operational margin trends highlights the impact of non-recurring items. Adjusted EBITDA excluding ESOP stood at ₹700 million, up 11% year-on-year, with EBITDA margin at 10.6%, down 45 basis points year-on-year, mainly due to 130 basis points higher RM/sales at 41.6% and 120 basis points higher other expenses/sales at 23.1%.
Nomura retained its 'Buy' rating on Eureka Forbes after the company reported Q1FY27 EBITDA ahead of its estimates and Bloomberg consensus, with improving water purifier volume growth and broad-based momentum across categories and channels. However, the brokerage revised its DCF-based target price to ₹572 from ₹600 as it rolled forward its valuation to September 2027. The revised target price implies a FY28F target P/E of 38x, with Eureka Forbes currently trading at 30x FY28F EPS, which Nomura believes is attractive given its expected 20% EPS CAGR over FY26-29F. Nomura kept its revenue growth estimates unchanged at 15%/12%/12% year-on-year for FY27F/FY28F/FY29F, but lowered EBITDA margin estimates by 30/50 basis points to 12.4%/13.1% for FY27F/FY28F and introduced a 13.5% estimate for FY29F, resulting in 4% and 6% cuts to FY27F and FY28F EPS estimates respectively.
