The international brokerage assigned a 12-month target price of Rs 640 per share for the stock, implying an upside potential of 44% from the previous closing price of Rs 445 on the NSE, and listed four key drivers that could support a long runway for growth.
India’s water purifier market currently has revenues of around Rs 5,400 crore, and UBS expects it to reach Rs 9,600 crore with a 12% CAGR by FY30, driven by improving penetration, rising health and hygiene awareness, and a lower total cost of ownership supported by a 2x longer filter life. It noted that the target consumer base is also expanding by around 9% annually, led by rising incomes and further aided by urbanisation and family nuclearisation.
“We expect Eureka Forbes to outgrow the market and gain a 150 bps share, supported by product innovation, smart features and design. Eureka Forbes’ unmatched brand equity, with Aquaguard being a virtual synonym for water purifiers, further strengthens its competitive position,” UBS said.
Water purifiers have a relatively small total addressable market (TAM), requiring differentiated, service-intensive distribution networks, which limits the attractiveness for scale-focused white-goods companies, the international brokerage said.
“EFL’s extensive pan-India footprint (21,000+ outlets, 19,500 pin codes, and 4,500/8,000+ frontline staff and service engineers) enables it to address an underpenetrated market with limited competition,” it added.
Eureka Forbes’ valuation is in line with the broader consumer durables sector, UBS said. “Our 36x target PE for EFL is at a ~10% discount to the average valuation of consumer durables, despite EFL’s leadership in the water purifier segment, offering an attractive risk-reward profile. We also see strong upside potential from the fast-scaling air purifier and vacuum cleaner category (~2.5x growth by FY30E vs FY25). Downside risks stem from potential execution shortfalls in cross-selling or cost-efficiency initiatives,” it further said.Eureka Forbes shares have gained around 8% in the past five days but declined more than 14% in the past one month and around 21% in the past six months. The stock was trading with marginal losses at Rs 443 per share as of 1:15 pm.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)