Strong momentum in product business led by acceleration in electric water purifiers, robotics and air purifiers: Eureka Forbes delivered a strong performance in its products business in FY25, with growth accelerating to 17% YoY (vs. 12.7% in FY24), led by both volume and favourable price/mix. In terms of segments, electric water purifiers saw a sharp step-up in sales growth (up 18.1% vs. 10.6% in FY24), supported by focus on driving penetration sustained innovation and premiumisation. While overall growth in vacuum cleaners moderated on a high base (grew 12.8% vs. 18.9% in FY24), the robotics sub-segment continued to witness strong traction, led by innovation (3x increase in range) and rising adoption of convenient cleaning solutions.
Green shoots visible in service business, revenue flow-through expected from 4QFY26E: The service business (1/3rd of FY25 sales) grew c.3% (vs. flat sales in FY24). While FY24 was about improving affordability through launch of tiered AMCs, the focus in FY25 was on enhancing customer experience (strengthened customer app/rolled out new service technician app), scaling up AMC unit sales (with personalised AMC recommendations, targeted campaigns to win back lapsed customers) and filter sales (through filter innovations and a separate go-to-market strategy). The outcome has been positive – the share of digitally booked complaints rose sharply to 80% in FY25 (vs. 33% in May’23), the active app installed base expanded to over 1.6mn (vs. 140k in May’23) and 64% of AMC bookings were digital in FY25 (vs. 28% in May’23), with dominant share from churned users. Increase in AMC units sales (double-digit booking seen in 1QFY26) points to green shoots and acceleration in service revenue should be visible from 4QFY26/FY27E.
Costs optimisation/scale benefits drives profitability: Despite GM contracting by c.80bps (due to buyback, promotions), EBITDA margin expanded 182bps YoY (+116bps YoY exESOP) in FY25 through rigorous cost optimisation, even as the company stepped up brand investments to drive growth. Savings in service charges (down 150bps as % to sales), staff costs (down 146bps as % to sales), and productivity improvements provided headroom for higher A&P spends (+124bps YoY as % to sales) while supporting overall margin expansion. We believe benefits of digital-led efficiencies & disciplined cost control will enable EFL to sustain transformation journey with enhanced growth and profitability.
