Eureka Forbes Q4 FY26: Double digit growth and record adjusted EBITDA margin

Eureka Forbes closed Q4 FY26 with steady growth and a cleaner earnings profile, even as management flagged fresh cost pressure from higher input costs and fuel prices. On a standalone basis, revenue rose 11.6 percent year on year to Rs 683.8 crore. Adjusted EBITDA increased 13.1 percent to Rs 90.2 crore, and the company reported its highest ever quarterly adjusted EBITDA margin at 13.2 percent, up 17 basis points from last year.

Profitability moved up in the operating line, while reported profit reflected the absence of last year’s one time gain. Adjusted profit before tax rose 8.1 percent to Rs 73.5 crore. Reported profit after tax was Rs 51.1 crore, up 0.7 percent year on year. Management noted that profit after tax before exceptional items grew 3.9 percent, because Q4 FY25 included a one time gain of Rs 2.1 crore pre tax.

The quarter mattered for two reasons. First, growth was not dependent on a single channel or product line. The company described it as broad based across categories, channels, and geographies, with service bookings also growing in double digits. Second, the balance sheet ended the year with a net surplus of Rs 443 crore, a lifetime high, which gives the company flexibility to keep funding growth investments.

What drove Q4 FY26 performance

The growth engine in Q4 FY26 was familiar but stronger in execution. Water purifiers delivered double digit revenue growth, supported by both volume and average selling price. The mid segment was called out as a key contributor, and the company launched two products during the quarter: Aquaguard Sure Hydra and Aquaguard Aspire Halo. These launches fit the stated plan of using new products to drive penetration and premiumization in water.

The second growth engine was emerging categories. Robotics continued its breakout performance, helped by omni channel growth and a rising share of premium stock keeping units. Air purifiers also scaled quickly, with revenue rising to four times year on year on a low base. The presentation grouped robotics, softeners, and air purifiers as the newer pillars that are now contributing meaningfully to growth.

Services remained a stabilizer and a compounding lever. The company highlighted sustained momentum in service revenue and double digit growth in service bookings. Management also pointed to improving customer experience key performance indicators and a focused push on the filter after market opportunity. A notable data point in that push was the scale of its influencer driven awareness effort, with more than 1 billion video views to raise awareness on genuine filters.

Margins improved because operating leverage outweighed the step up in investments. In Q4 FY26, total expenses were 45.5 percent of revenue, down 101 basis points from last year, and down sharply from 49.5 percent in Q3 FY26. Adjusted EBITDA margin rose sequentially by 185 basis points versus Q3 FY26.

Financial summary

FY26 in context: growth plus a stronger base

FY26 was the second consecutive year of double digit revenue growth. Standalone revenue rose 11.3 percent to Rs 2,710.5 crore. Adjusted EBITDA climbed 16.4 percent to Rs 331.9 crore, and adjusted EBITDA margin expanded 55 basis points to 12.2 percent. This was the third consecutive year of margin expansion, despite higher investments in advertising, sales promotion, and capex.

Adjusted profit before tax rose 18.0 percent to Rs 278.2 crore. Profit after tax before exceptional items grew 19.3 percent to Rs 190.2 crore, while reported profit after tax fell 1.9 percent to Rs 160.2 crore. The gap between the two reflects exceptional items in FY26. The presentation states an exceptional impact of Rs 40.4 crore pre tax related to new labour codes.

The year also strengthened the balance sheet. Net surplus reached Rs 443 crore at year end, up 56 percent year on year. On a post lease liability basis, net surplus was Rs 414 crore. Rating upgrades over the last three years culminated in CARE AA with stable outlook and CRISIL AA with positive outlook.

Cash conversion stayed strong. Free cash flow was Rs 237 crore versus Rs 214 crore in FY25. Free cash flow as a share of profit after tax was 148 percent, and free cash flow was 2.8 times capex, even after capex rose to Rs 84 crore.

The strategy: building a multi category health and hygiene business

Eureka Forbes is trying to reposition itself as a direct to consumer health and hygiene tech leader. The transformation strategy has four levers.

The first is to grow water through deeper penetration and premiumization. Water remains a large and underpenetrated category in India, with product penetration cited at 7 percent and service penetration below 25 percent. The company is leaning on new launches and mix improvement to expand the installed base and the value per customer.

The second is to expand the portfolio into convenient cleaning and air. Robotics is already a visible contributor, and management underlined premiumization in that line. Air purifiers are scaling fast from a small base. Water softeners are also positioned as a long runway category, with penetration below 1 percent.

The third is to excel in service and raise lifetime value. The company’s service footprint is a structural advantage, with in home service across more than 19,500 pin codes and a first party customer database of 14 million customers. The focus on filters is not only an awareness exercise. It is a recurring revenue opportunity and a customer trust lever, especially when management is investing to improve customer experience metrics.

The fourth is building a direct to consumer platform around convenience and commerce. The presentation frames this as a platform play rather than only a channel shift. In practice, the company also benefits from an omni channel presence that spans direct sales, general trade, modern retail, ecommerce, D2C, B2B, and CSD.

This strategic mix helps explain why the company is comfortable stepping up growth investments while still expanding margins. Advertisement and sales promotion spend in FY26 was Rs 293.7 crore, 10.8 percent of revenue, compared with Rs 259.5 crore in FY25. Capex rose to Rs 84 crore in FY26 from Rs 55 crore in FY25, which the company described as transformation investments.

Margins and costs: leverage helps, but risks are rising

Two structural trends stand out in the cost story.

First, gross margin remained resilient. FY26 gross margin was 58.8 percent, up 46 basis points year on year and within a range of 58 to around 60 percent over four years. Management credited a well institutionalized cost of goods sold program and a portfolio that straddles multiple price points.

Second, operating leverage continued to improve. Operating expenses excluding advertisement and sales promotion were 35.7 percent of revenue in FY26, down 27 basis points from FY25. Over four years, this ratio has fallen sharply, from 43.9 percent in FY23 to 35.7 percent in FY26.

But the near term is not frictionless. The company flagged that the recent West Asia crisis led to a significant increase in input costs, and that higher fuel prices could add pressure. It also noted that inflationary headwinds may weaken consumer sentiment. To manage these pressures, Eureka Forbes implemented calibrated price increases of up to 10 percent, effective April 1, 2026.

The ability to take pricing is supported by brand strength in Aquaguard and by the company’s service relationship with customers. Still, the trade off is clear. Higher prices can protect margins, but they can also test demand, especially in discretionary categories such as vacuum cleaners and air purifiers. How the company manages mix and affordability, especially in the mid segment where it saw strong water growth, will shape the next few quarters.

Ambition through FY30: scaling with profitability

Eureka Forbes set a clear ambition for FY25 to FY30: more than double revenue and more than triple adjusted EBITDA in five years. The ambition table points to revenue rising from Rs 2,436 crore in FY25 to Rs 5,400 to Rs 5,600 crore by FY30. Adjusted EBITDA is targeted to grow from Rs 285 crore in FY25 to Rs 800 to Rs 850 crore, with adjusted EBITDA margin moving toward about 15 percent.

The FY26 base is already moving in that direction. Revenue reached Rs 2,710 crore and adjusted EBITDA reached Rs 332 crore, with margin at 12.2 percent. The question for investors is not whether growth engines exist, but whether the company can scale multiple categories simultaneously while holding the service experience together and absorbing cost volatility.

Management’s commentary in the quarter leaned into execution. It described broad based growth, improving customer experience, and a reshaped business that is now firmly multi category. It also emphasized that, in an uncertain environment, the company will keep investing for growth while improving productivity and reducing inefficiencies.

Takeaways for investors

Q4 FY26 showed a familiar but important pattern. Eureka Forbes grew at a healthy pace, expanded adjusted EBITDA margin to a record 13.2 percent, and ended the year with a stronger balance sheet and strong cash conversion. FY26 extended this trend, with 11.3 percent revenue growth and a third straight year of adjusted margin expansion.

The growth story is increasingly multi engine. Water remains core and is benefiting from new launches and a mid segment push. Robotics is no longer a side narrative and continues to premiumize. Air purifiers are scaling rapidly from a low base, and softeners are positioned for a longer runway. Services remain a moat, anchored by reach across 19,500 plus pin codes and a 14 million customer base.

The near term risk is input cost volatility and its impact on both margins and consumer demand. The company has responded with price hikes effective April 1, 2026, and investors will watch whether volume momentum holds.

For now, the quarter’s theme is disciplined growth with improving quality. If operating leverage continues and the service transformation keeps compounding lifetime value, Eureka Forbes has a credible path toward its FY30 ambition of higher scale and higher margins, even in a choppy macro environment.