Eureka Forbes has received a Buy rating from UBS Group AG, with the global investment bank setting a target price of ₹640 for the home appliances company. The initiation comes as UBS identifies significant growth opportunities across the company's key business segments.

Water Purifier Market Opportunity

UBS highlights the substantial potential in the water purifier market, which represents 45% of Eureka Forbes' revenue. The brokerage notes that this market remains underpenetrated, presenting an inflection point for growth. The firm expects the company to capitalize on this opportunity through strategic investments.

Market Share and Margin Expansion Strategy

The investment bank anticipates that Eureka Forbes will achieve market share gains of approximately 150 basis points through focused capital expenditure and research & development initiatives. This strategic approach is expected to strengthen the company's competitive position in the home appliances sector.

UBS also projects margin expansion of around 250 basis points, driven by the company's higher-margin service and filter businesses. These segments are expected to contribute significantly to overall profitability improvements.

Growth Projections Across Segments

The brokerage forecasts strong performance in the vacuum and air purifier category, with an expected compound annual growth rate of approximately 18%. This segment represents a key growth driver for the company's diversification strategy.

Financial Outlook

UBS projects robust financial performance for Eureka Forbes over the FY25-28 period, with revenue expected to grow at a compound annual growth rate of approximately 13%. More significantly, EBITDA is anticipated to expand at around 22% CAGR, reflecting the company's focus on higher-margin business segments and operational efficiency improvements.

The combination of market share gains, margin expansion, and strong growth in key product categories forms the foundation of UBS's positive outlook on the stock, leading to the Buy recommendation with a ₹640 target price.

Eureka Forbes Limited announced its Q3FY26 financial results on February 04, 2026, demonstrating resilient performance with 8.0% YoY revenue growth despite challenging market conditions. The company reported strong momentum in robotics and air purifiers while facing headwinds in its core water purifier segment.

Q3FY26 Financial Performance

The company delivered solid operational metrics with revenue from operations reaching ₹645.4 crores compared to ₹597.8 crores in Q3FY25. Adjusted EBITDA margin expanded 57 basis points YoY to 11.3%, supported by healthy gross margins at 60.8%.

Business Segment Performance

The quarter showcased multiple growth drivers across different product categories. Robotics business continued its strong trajectory with robust growth, while air purifiers witnessed exceptional broad-based demand with revenue scaling 3x YoY. However, water purifiers faced challenges due to high channel inventory and post-festive consumer demand slowdown.

Labour Code Impact and Exceptional Items

The quarter was significantly impacted by exceptional charges of ₹40.4 crores (pre-tax) due to implementation of new Labour Codes. The Government of India notified four Labour Codes on November 21, 2025, consolidating 29 existing labour laws, resulting in one-time incremental impact on retiral benefits. This reduced reported PAT to ₹9.0 crores from ₹39.0 crores before exceptional items.

Nine Months FY26 Performance

For the nine months ended December 31, 2025, the company maintained strong operational performance with revenue from operations increasing 11.1% YoY to ₹2,026.6 crores. Adjusted EBITDA grew 17.7% YoY to ₹241.7 crores with margin expansion of 67 basis points to 11.9%.

Management Commentary and Outlook

Commenting on the performance, MD and CEO Pratik Pota highlighted the company's resilient performance in a challenging macro environment. He emphasized that despite water purifier challenges, the company outperformed the category and gained market share during the quarter. The management remains confident about the underlying business potential and long-term ambition of achieving strong and sustained profitable growth, with multiple growth vectors now clearly established across robotics, air purifiers, and service transformation.

Analyst Conference Call Recording Available

Following the results announcement, Eureka Forbes Limited has made available the audio recording of its conference call with analysts and investors held on February 05, 2026. The recording has been uploaded on the company's website under regulatory disclosure requirements as per Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.