Eureka Forbes gets two 'Buys' in 12 days; why are analysts turning bullish?

Eureka Forbes share: Analysts see strong growth momentum, margin expansion, and deeper traction in after-sales services as catalysts for sustained shareholder returns.

Eureka Forbes, India’s top water purifier and vacuum cleaner brand, has secured consecutive brokerage endorsements, with Emkay Global initiating coverage with a ‘Buy’ on September 4, followed by Nuvama Institutional Equities on September 16.

 

Analysts see strong growth momentum, margin expansion, and deeper traction in after-sales services as catalysts for sustained shareholder returns.

 

Market leader in underpenetrated categories

 

Incorporated in 1982, Eureka Forbes dominates India’s organised electric water purifier (EWP) market, holding a 40-45 per cent share of the ₹4,900 crore industry, 10-12 percentage points ahead of its nearest rival. It is also the clear leader in vacuum cleaners, commanding 60-70 per cent of the ₹6bn segment.

 

 

Yet, both categories remain underpenetrated, with water purifiers at just 6 per cent penetration and vacuum cleaners below 2 per cent. That, analysts believe, underlines the long growth runway ahead.

 

“Eureka Forbes is the only large full-stack water purifier player in an underpenetrated market,” Nuvama noted, adding that it is reinforcing its brand via product innovation, omni-channel reach, and a revamp of after-sales services.

 

Emkay was equally upbeat, highlighting, “EFL is transforming products and services, unlocking significant growth in highly underpenetrated categories of water purifiers and vacuum cleaners, while also entering adjacent categories.”  Track Stock Market LIVE Updates 

Product innovation and affordability

 

The company has ramped up innovation, launching more than 30 products in FY25 across economy, mid, and premium segments. It has doubled R&D strength, tripled capex, and forayed into smart connected appliances.

 

Affordability is another lever. Emkay highlighted the company’s new entry models priced at ₹6,500, while premium offerings in the ₹15,000-20,000 range are helping expand the category.

 

Vacuum cleaners are undergoing a makeover too. Robotic models have tripled in a year and now contribute more than half of segment revenues, analysts noted. Campaigns such as ‘cleaning as easy as 1-2-3’ are targeting first-time users.

 

Services: The multiplier effect

 

After-sales services, which already account for a third of revenues, are emerging as the earnings multiplier. Eureka Forbes’ installed base of 14 million units is supported by over 8,000 technicians covering more than 19,500 pin codes.

 

Nuvama expects after-sales revenues to grow at a 12 per cent CAGR between FY25 and FY28, with segment profit compounding over 25 per cent. Its report pointed to initiatives such as QR-coded filters to curb counterfeits and a mobile app now handling 70 per cent of bookings, up from 7 per cent two years ago.

 

Emkay sees digitisation as a catalyst, noting, “App-based engagement has risen sharply, with 80 per cent of complaints now online compared with 33 per cent in May-23. Tailored AMCs, QR-coded filters, and one-hour service guarantees are further enhancing customer stickiness.”

 

Margin expansion, financial strength

 

Despite heavier spending on marketing and R&D, EFL has expanded margins by ~400 basis points (bps) in two years to 11 per cent in FY25. Analysts see major headroom since rivals like Kent operate at 15-20 per cent.

 

Nuvama projects a 14 per cent revenue compound annual growth rate (CAGR) alongside 24 per cent/31 per cent Ebitda/AT CAGR over FY25-28, aided by cost optimisation and operating leverage. It also forecasts free cash flow to grow at a 24 per cent CAGR, with FCF-to-revenue ratios higher than peers.

 

Emkay models ~13 per cent revenue CAGR, ~20 per cent Ebitda CAGR, and ~24 per cent EPS CAGR, noting that the company swung to a net cash position of ₹250 crore in FY25 from net debt in FY23.

 

Valuations and targets

 

Both brokerages value the stock at premium multiples, citing strong growth visibility. Nuvama started coverage with a ‘Buy’ rating and a target price of ₹700, based on 42x Sep-27E EPS. Likewise, Emkay had started coverage with a ‘Buy’ rating and a target price of ₹725, valuing EFL at 50x Sep-27E PER.

 

“Backed by 6x R&D and 8x A&P investments in three years, Eureka Forbes is reshaping category perception, breaking affordability barriers, and delivering sustained double-digit growth,” Emkay wrote.

 

Nuvama called it “a strong compounding opportunity” while flagging risks from competitive intensity and potential delays in after-sales payoffs.

 

Two ‘Buy’ ratings in just 12 days highlight growing confidence that Eureka Forbes is at an inflection point. With dominant positions in underpenetrated categories, a revitalised product pipeline, a digitised service model, and room for margin gains, analysts believe the company is well-placed to deliver 20 per cent-plus compounding returns over the medium term.