HDFC Securities starts coverage on Eureka Forbes with 'Buy'; check target

HDFC Securities expects Eureka Forbes to deliver strong growth over FY25-28, with revenue, Ebitda, and profit rising at a CAGR of 14 per cent, 23 per cent, and 27 per cent, respectively

Eureka Forbes share price today: Domestic brokerage HDFC Securities has initiated coverage on Eureka Forbes, a Mumbai-based home appliance company, with a 'Buy' rating. According to the brokerage, the positive view stems from the company's strong market leadership in highly underpenetrated categories, its high brand equity, capable management team, and asset-light model. 

 

"The company has undergone a major turnaround under new management following Eureka’s acquisition by Advent International, with notable improvements in both growth and margins," HDFC Securities said in a research note.

 

The brokerage expects Eureka Forbes to deliver strong growth over FY25–28, with revenue, Ebitda, and profit rising at a CAGR of 14 per cent, 23 per cent, and 27 per cent, respectively, driven by steady demand for water purifiers, a recovery in the service business, and strong traction in vacuum cleaners. Eureka Forbes is seen as the top pick in the consumer durables sector.

 

HDFC Securities values the stock at 45x Mar-28E AEPS (excluding non-cash intangible amortisation and 50 per cent of performance-based ESOP expenses), arriving at a target price of ₹830 per share. The target price indicates an upside potential of 42.4 per cent from Tuesday, November 25, closing price of ₹582.90.  CATCH STOCK MARKET UPDATES TODAY LIVE 

At 12:30 PM on Wednesday, November 26, the Eureka Forbes stock was trading at ₹595.85, up over 2.2 per cent compared to the previous session's close on the NSE. In comparison, the NSE Nifty50 was up 268.25 points or 1.04 per cent at 26,153.05 levels. The company's total market capitalisation stood at ₹11,529.76 crore.

Here's why HDFC Securities is bullish on Eureka Forbes Stock:

Market leader in an underpenetrated market: Analysts noted that Eureka Forbes is the market leader in both electric water purifiers and vacuum cleaners — categories that remain highly untapped in India, with penetration levels of just 6 per cent and 2 per cent, respectively. The company holds around 40 per cent of the organised water purifier market and roughly 60 per cent in vacuum cleaners. Its wide-ranging, multi-channel distribution strategy is seen as a key driver for expanding market reach and supporting long-term growth potential.

 

Margins on an upswing: The brokerage added that Eureka Forbes’s Ebitda margin has improved from 7 per cent in FY23 to 11 per cent in FY25 and 12 per cent in H1FY26. "We expect the margin to continue to expand, led by operating leverage and cost optimisation drive, and reach mid-teens within the next five years," the brokerage said. Margins could further move into the high teens in the longer term as advertising spends, currently around 11 per cent of sales, normalise.  ALSO READ | L&T gains 2%, hits new high; brokerages see more upside in stock price 

Robust business model: HDFC Securities expects Eureka Forbes to benefit from increasing category penetration and its market-leading position, driving a 14 per cent consolidated revenue CAGR over FY25-28E. Additionally, earnings growth is set to outpace revenue, with Ebitda and APAT projected to compound at 23 per cent and 27 per cent CAGRs, respectively, supported by expanding margins and strong operating cash flows. The company’s asset-light model is likely to sustain rising free cash flows and robust return ratios.

 

Following the acquisition by Advent International in 2022, Eureka has witnessed a significant revival under new management, bouncing back after a decade of muted growth. The product business CAGR has seen high teens in recent quarters, and the services segment is gaining momentum, as bookings have grown from double digits in Q1FY26 to high teens in Q2FY26. 

 

"We remain positive on Eureka’s growth prospects, owing to its high brand equity, capable management team, and asset-light business model," HDFC said.  Disclaimer: Target price and stock outlook has been suggested by HDFC Securities. Views expressed are their own.