Eureka Forbes can double in 3-4 years, says Emkay; stock up over 2% today

Emkay initiated coverage on Eureka Forbes stock with a target price of ₹725, implying about 24 per cent upside.

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Emkay on Eureka Forbes: Shares of home appliances maker Eureka Forbes was in demand on the last trading day of the week i.e. Friday, September 5, 2025, rising as much as 2.08 per cent to an intraday high of ₹614.55, after domestic brokerage Emkay Global initiated coverage with a “Buy” rating. 

 

At 10:01 AM, the Eureka Forbes stock was trading 1.64 per cent higher at ₹611.90, outperforming the benchmark BSE Sensex, which was up 0.19 per cent at 80,867.53.

 

Emkay initiated coverage with a target price of ₹725, implying about 24 per cent upside, and noted that the “stock price has the potential to double in 3-4 years.” 

 

The brokerage highlighted three key reasons behind its bullish stance, including category leadership, revival of services, and margin expansion.

 

Category leadership with growth headroom

 

Eureka Forbes, a leading health and hygiene brand, has pioneered the water purifier and vacuum cleaner markets, commanding around 40 per cent and 60 per cent shares, respectively, analysts noted. Despite leadership, penetration remains low at 6 per cent for water purifiers and just 2 per cent for vacuum cleaners, leaving a major runway for growth.

 

Backed by “6x R&D and 8x A&P investments in 3 years,” the company is breaking affordability barriers with entry-level models priced at ₹6,500 and premium offerings in the ₹15,000-20,000 range. New product launches and campaigns such as “cleaning as easy as 1-2-3” are expanding first-time usage. Robotics now contributes over 50 per cent of vacuum cleaner revenues. Thus, Emkay expects 13-15 per cent revenue CAGR in these categories over FY25-28.

 

Transformation in service business

 

The brokerage flagged a structural turnaround in Eureka Forbes’ service operations. The firm has shifted from traditional AMCs to tailored solutions, scaling its installed app base to 1.6 million users in FY25 from just 140,000 two years earlier. 

 

Digitisation features such as slot-based booking, technician tracking, QR-coded filters, and one-hour service guarantees have lifted app-based engagement to 80 per cent of complaints versus 33 per cent earlier.

 

“While service revenues grew at just 2 per cent CAGR over FY23-25, early green shoots are visible,” Emkay noted, citing double-digit growth in bookings in Q1FY26. The brokerage models ~13 per cent revenue CAGR in services over FY25-28.

 

Margin expansion and profitability focus

 

Eureka Forbes has also delivered a sharp turnaround in profitability. Margins improved by ~400 bps in two years to 11 per cent in FY25, aided by scale and disciplined spending, even as R&D and marketing expenses increased. Net cash rose to ₹250 crore in FY25 from net debt in FY23, underscoring balance-sheet strength.

 

Though margins still lag Kent’s ~15-20 per cent, Emkay sees “major headroom for improvement” as the company embarks on its next phase of Ebitda optimisation. It values the stock at 50x Sep-27E price-to-earnings on the back of ~24 per cent EPS CAGR, superior returns, and an asset-light model.