Eureka Forbes reported a resilient Q3 FY26 performance with 8% YoY revenue growth and an adjusted EBITDA margin expansion of 57 basis points to 11.3%, despite macroeconomic slowdowns impacting consumer demand, especially in e-commerce. Management attributed the Q3 dip as a temporary aberration, expecting Q4 growth to exceed the 11.1% YTD growth. Strategic focus remains on expanding emerging categories like Air Purifiers and Robotics, alongside growing the service business.
Q3 FY26 Performance Highlights
Eureka Forbes reported resilient performance for Q3 FY26. Management highlighted that revenue grew 8% year-on-year, while the adjusted EBITDA margin expanded by 57 basis points to 11.3%.
CEO Pratik Pota noted that the quarter faced macro challenges, with a post-festive slowdown most pronounced in the e-commerce channel and the Water Purifier category. However, the company gained market share sequentially and YoY in Water Purifiers. Emerging categories performed strongly, with Robotics maintaining a strong trajectory and Air Purifiers delivering a 3x growth performance (albeit on a low base).
Financial Metrics and Outlook
CFO Gaurav Khandelwal confirmed revenues stood at INR 645.4 crores for Q3. He noted that Q3 results were impacted by a one-time pre-tax charge of INR 40.4 crores related to new labor codes, treated as exceptional expense.
On a combined Q2 and Q3 basis, the company delivered robust double-digit revenue growth of 11.7%. Gross margins expanded 331 basis points YoY to 60.8%, driven by the COGS optimization program. A&SP spends grew by 23.3% YoY, reflecting investment in category awareness.
Year-to-Date (YTD) FY26 revenue reached INR 2,026.6 crores (11.1% growth YoY), with an adjusted EBITDA margin of 11.9% (up 67 bps YoY).
Management Strategy Reframed
Management framed Q3 as a one-off aberration caused by temporary channel-specific issues. They expect Q4 growth to be ahead of the YTD FY26 growth of 11.1%, returning to the long-term glide path aimed at achieving 2x revenue and 3x EBITDA by FY30.
Key Strategic Pillars:
- Water Purifiers: Continue driving penetration and premiumization, highlighted by the launch of the premium Aquaguard Arctic Blaze (INR 79,999).
- Emerging Categories: Continue investing in the playbook for Convenient Cleaning, Softeners, and Air Purifiers, leveraging strong momentum.
- Service: Focus on the non-AMC aftermarket opportunity, expecting meaningful impact starting from Q2 of next year.
- Customer Base: Utilize the installed base for online-to-offline D2C upgradation and cross-selling programs.
Q&A Insights
Inventory Normalization
Management confirmed that excess inventory built up in Q2 (in anticipation of higher Q3 sell-out) is being unwound. They expect inventory normalization across all channels by the end of the current quarter (Q4).
Service Cost of Ownership
Reducing the effective cost of ownership (entry and sustenance costs) has been a key focus. Initiatives included launching the economy product Aquaguard Sure and a lower-priced AMC. This effort has led to the cost of ownership dropping by 40%-50% over the last 5 years.
E-commerce Channel Dynamics
The Q3 deceleration was confirmed to be primarily due to a slowdown in traffic on one specific e-commerce platform, not an execution issue between the company and the platform teams. The other major platform performed well.
Cash Deployment
With an increasing cash balance, the preference is to use cash for growth investments, both organic and inorganic. YTD FY26 Capex is running close to INR 60 crores, with full-year guidance maintained between INR 60 to INR 70 crores. Shareholder rewards remain an ongoing discussion subject to Board approval.
Source: BSE
