Eureka Forbes Ltd Q1 FY2027 Concall Summary

Key Takeaways

• Strong top line, margin held by leverage: Revenue grew 15.3% YoY with broad-based product momentum, while adjusted EBITDA margin slipped only 46 bps despite a 131 bps gross margin hit from commodities and forex.
• AMC price hike traded bookings for value: Service revenue growth matched Q4 FY26, but fresh AMC bookings softened as customers deferred renewals after a 3% to 12% price increase; management calls it deferral, not lost revenue.
• Filters are the new service engine: A pivot seven to eight months back simplified 65-odd filters into five universal filters and built an open distribution system, creating a second service revenue driver for customers who skip AMC.
• FY30 ambition restated as the North Star: Management remains confident of 2x revenue and 3x EBITDA from FY25 to FY30, with robotics alone targeted at ₹1,000 crores by FY30.
• What to watch next quarter: Whether AMC renewal deferrals normalize, whether filter distribution gains scale into quantified growth, and whether Q2 service revenue growth holds at Q1 levels as guided.

Revenue Performance

• Product-led growth: Revenue grew 15.3% YoY, driven by accelerated, broad-based growth across the product business, especially water; retail, direct, and e-commerce all delivered strong double-digit growth.
• Water purifiers: High-teens growth on double-digit volume growth, led by the economy range, expanded stainless-steel products, and premium offerings in Hot, UTC and IoT; growth ran well ahead of category, driving market share gains.
• Robotics: Strong growth driven by premiumization and the shift toward fully automatic cleaning; the top-end fully automatic cleaning station launched last year did exceptionally well.
• Water softeners: Strong double-digit, volume-led growth reflecting growing category relevance and potential.
• Service revenue: Growth tracked at levels seen in recent quarters, similar to Q4 FY26; management disputed an analyst's "flat" characterization, pointing to the deferred liability balance in the annual report as an annuity stream now entering FY27.
• Filters: The filter portfolio grew well in Q1, supported by stepped-up awareness campaigns on genuine Aquaguard filters.

Gaurav Khandelwal: "I think you made a point that in your assessment service revenue growth was flat, that is not the case. The growth that we've seen -- the revenue growth that we've seen in our service business is very similar to the growth that we saw in Q4 FY26."

Margins & Cost Environment

• Employee costs rose 10.7% YoY on normal annual increments; ESOP charges rose 16.2% on fresh grants and expanded coverage as a talent retention tool.
• Other expenses rose 21.4% YoY, almost entirely from A&SP, with investments focused on strengthening in-store presence in modern retail.
• Price vs cost: Management said they may not have fully covered cost increases in percentage terms, but in absolute terms they have covered it.
• No further hikes planned: Bias is toward not disturbing the strong growth tailwind; efficiencies will come from other parts of the business to keep margins.
• Cost correction stance: If input costs correct, management will pass them on to consumers to stay competitive and drive growth and market share.

Pratik Pota: "Yes, while we may not have fully covered for the cost increase in percentage terms, in absolute terms, we have indeed covered for it."

Service Business & AMC Pricing

• AMC price increase: Implemented during the quarter at roughly 3% to 12% for single-year and multi-year AMCs; peers followed with a lag of roughly 30 days, restoring price equilibrium.
• Bookings softness: The price increase led some customers to postpone AMC purchase, waiting before opting in; overall bookings growth was softer than expected or liked.
• Revenue lag: Bookings growth translates to revenue with a lag because AMC tenure is typically 18 months.
• Price hike rationale: No AMC price increase for quite some time while fuel and labor inflation accumulated; calibrated with analytics on price-sensitive customer segments.
• Normalization expected: Deferral and postponement of AMC renewals from the price increase are expected to reduce, mitigate, and normalize over time.
• Service revenue visibility: Q2 service revenue growth expected to be similar to Q1, not very different; beyond that depends on bookings and filter business scale-up.
• Service liability: The deferred liability balance helps revenue in FY27, but in-year bookings are also required; relative softness in AMC bookings would play out toward the later part of the year, with filter growth providing a compensating effect.

Pratik Pota: "At this point in time, we are going to be more measured as far as consumer price increase is concerned because we see a very, very strong tailwind as far as growth is concerned and our bias will be towards not disturbing that."

Filter Business Pivot

• Assortment simplification: Toward the end of last year, the company launched a simplified filter assortment, going from 65-odd filters to five universal filters.
• Open distribution system: Reached out to an open ecosystem of distributors of filters and spares and created a new distribution system targeted at this market.
• Strategic pivot: Nearly seven to eight months back, the company pivoted to drive the filter portfolio as a second driver of service revenue, capturing customers who chose not to opt for or renew AMC.
• Awareness campaign: Launched a digital campaign with the line "Stop, Check and Relax," asking customers to stop technicians and check what filter was being installed; digital campaigns sustained, in fact increased in Q1.
• Margin profile: Filter gross margin is slightly lower than AMC but not very off; filter is also a relatively high gross margin business.
• Growth expectation: Filters are expected to grow well ahead of AMC growth toward FY30.

Product Innovation & Category Strategy

• Four-year filter life products: About 45 days ago, first in the country to launch water purifiers with four-year filter life; two e-commerce products, Glow 4X and Ritz Pro 4X with stainless steel, priced at roughly ₹22,000 and ₹25,000 respectively; met with very positive response; competitors followed more recently.
• Two-year filter life range: Last year, launched the largest range of water purifiers with two-year filter life, helping reduce cost of ownership and attract new customers.
• Tiered AMC: Three years ago, launched segmented/tiered AMC with AMCs starting as low as ₹699 to reduce perceived cost of ownership.
• Cost of ownership focus: Two strategic directions: grow penetration through affordability (cost of entry and cost of ownership) and drive differentiation/premiumization.
• Market share gains: Came on the back of strong consumer propositions, enhanced point-of-sale investments through greater promoters, more visibility, and disciplined execution; management denied any supply constraint benefit from other players.
• Category growth: More competitors in water purifiers create excitement, drive innovation, create consumer interest, and help grow the category; management welcomes all competitors.

Management: "Anything that addresses and tackles this barrier of the high TCO will help drive category growth and will help get new customers in."

Robotics & FY30 Ambition

• Robotics campaign: Launched a new campaign featuring Shraddha Kapoor for robotics, aimed at accelerating category adoption and strengthening leadership.
• Category shift: Robotics has moved from being merely online to growing aggressively offline; modern trade chains (national and regional) showing significant growth; top traditional trade outlets showing strong traction.
• Portfolio ambition: Intend to have a portfolio spanning the entire continuum from ₹15,000 to ₹75,000–80,000, up to ₹1 lakh, much like the water portfolio.
• Indian-specific features: Will curate functionalities for Indian consumer needs: corner cleaning, cleaning under sofas, superior dust cleaning efficacy; carpet cleaning is not important for India.
• Service network: The service network across 19,500 pin codes is being strengthened to service robotics.
• Cross-sell engine: Will reach out to the 1.5 crore customer database to cross-sell robotics; many would be early adopters.
• Offline and direct sales: Will leverage the strong offline presence of 3,000 outlets, point-of-sale visibility, point-of-sale promoters, and a fleet of direct sales employees who can do physical demos at customer homes.
• FY30 target: Robotics will be a ₹1,000 crores business by FY30.
• FY30 mix: Product segments (robotics, air purifiers, softeners) expected to grow ahead of the average; product growth expected to be even higher than 17–18% CAGR.

Management: "It replaces manual labor. It gives a Plan B for the homemaker when the maid doesn't turn up."

Guidance & Commitments

Key Metrics