Eureka Forbes FY26: Growth broadens as margins expand, but inflation becomes the next test

Eureka Forbes closed Q4 FY26 with a familiar mix of consumer relevance and operational discipline. On a standalone basis, Q4 revenue rose 11.6% year on year to INR 683.8 crore. Adjusted EBITDA grew 13.1% to INR 90.2 crore and adjusted EBITDA margin expanded 17 bps to 13.2%, the company’s highest ever quarterly adjusted margin. Profit after tax before exceptional items stood at INR 51.1 crore, up 3.9% year on year, while reported PAT growth was muted because the base quarter included a one-time gain.

For the full year, Eureka Forbes delivered its second consecutive year of double-digit growth. FY26 revenue increased 11.3% to INR 2,710.5 crore. Adjusted EBITDA rose 16.4% to INR 331.9 crore and margin improved 55 bps to 12.2%, marking the third consecutive year of margin expansion. PAT before exceptional items grew 19.3% to INR 190.2 crore, while reported PAT fell 1.9% to INR 160.2 crore due to an exceptional charge related to new labour codes.

Q4 FY26: growth broadens beyond the core

Management described Q4 growth as broad-based across categories, channels and geographies. Water purifiers returned to double-digit growth and the company highlighted continuing momentum in emerging categories. The presentation also noted that the product business grew in the early teens, supported by category contributions beyond water.

Two new water purifier products were launched in Q4: Aquaguard Sure Hydra and Aquaguard Aspire Halo. Management said water purifier growth was supported by both volume and ASP, with strong growth in the mid segment.

Emerging categories were positioned as the second engine of growth. Robotics was highlighted as a breakout category, supported by omni-channel expansion and premiumization. The company also pointed to rapid scaling in air purifiers, with Q4 revenue rising sharply on a low base. While air purifier demand is seasonal and Q4 is typically smaller than Q3, management continued to emphasize the long-term relevance of the category.

Service was the other pillar. The company said service bookings continued to grow in double digits and customer experience KPIs improved further. In Q4, service charges grew only 2.7% year on year, which management attributed to efficiency programs that reduced leakages, even as bookings increased.

FY26: sustained growth with a third year of margin expansion

FY26 reinforced a pattern the company has been trying to institutionalize: grow while investing, and still improve margins through operating leverage. Gross margin expanded 46 bps to 58.8% and the company said gross margins have stayed range-bound at 58% to around 60% over the last few years, supported by mix management and a well-institutionalized cost-of-goods program.

Operating leverage continued to show up in cost ratios. Employee benefit expenses grew 7% but fell to 12.1% of revenue from 12.6% in FY25. Operating expenses excluding advertising and sales promotion declined to 35.7% of revenue from 36.0%, which the company highlighted as an ongoing productivity lever.

Eureka Forbes also stepped up its transformation investments. FY26 capex rose to INR 84 crore, up from INR 55 crore in FY25, taking capex to 3.1% of revenue. Advertising and sales promotion spends increased to INR 293.7 crore, or 10.8% of revenue.

Service and filters: improving experience, chasing a large installed base opportunity

The company’s service narrative in FY26 went beyond bookings. Management described a sharper focus on customer experience and explained that service delivery expectations are changing, driven by platform-led consumer habits. Eureka Forbes said it moved from a 24-hour turnaround promise to a 2-hour slot promise, and is exploring a 4-hour service promise through pilots.

A key revenue opportunity is aftermarket filters for the large installed base of Aquaguard users who are not on annual maintenance contracts and often buy filters in the open market. The company said it launched a simplified assortment of filters and filter kits, built a new distribution system, and began investing in consumer education. An influencer-led campaign crossed 1 billion views, aimed at creating awareness for genuine filters.

Management was also explicit about the time needed for this initiative to scale. Filters are purchased infrequently and consumer behavior is entrenched, so the company expects sustained investment and patience to be required. Importantly, management linked the step-up to double-digit service growth to unlocking this filter opportunity.

Inflation and FY27: pricing actions, margin focus, and the next set of levers

The biggest shift in tone came from the macro environment. The company cited the West Asia crisis, higher fuel prices, and currency depreciation as drivers of input cost inflation. In response, it implemented an average price increase of 6% to 7% across categories effective April 1, 2026.

Management said there was no material channel loading due to the price hike and early indicators suggest the increase has landed well, with no meaningful impact on sell-outs or evidence of down-trading so far. The company also said competitors have taken price hikes, reflecting the same inflationary pressures.

The CFO indicated that if input cost inflation sustains at current levels, FY27 could face gross margin headwinds. The stated mitigation plan rests on three pillars: pricing, mix management and an expanded COGS program, alongside continued productivity and leakage reduction in service.

On profitability, management’s stated aim for FY27 is to at least hold margins on a full-year basis, while stepping up revenue growth. The company reiterated that FY27 growth aspiration is expected to be driven primarily by volume rather than pricing alone.

Balance sheet and cash: a clear strength

Eureka Forbes also highlighted a stronger financial foundation. Net surplus reached INR 443 crore in Q4 FY26, a 56% year-on-year increase, and the company reported FY26 free cash flow of INR 237 crore. It also disclosed a free cash flow to PAT conversion of 148%, despite the step-up in capex.

The presentation pointed to a negative working capital structure and low capex intensity, and it highlighted credit ratings of CARE AA Stable and CRISIL AA Positive, with four upgrades in three years.

What to track from here

Eureka Forbes ended FY26 with momentum in revenue and the highest ever quarterly adjusted EBITDA margin in Q4. The company’s narrative is increasingly anchored on becoming multi-category, with robotics and air purifiers acting as visible growth engines and water purifiers remaining the anchor category.

FY27, however, will test execution in a different way. Inflation and currency pressure will challenge gross margins, making the balance between volume-led growth, calibrated pricing, and efficiency programs more important. If the filter aftermarket initiative scales while service experience continues to improve, it could also become a meaningful contributor to the company’s ambition of more than doubling revenue and more than tripling EBITDA by FY30.