Smallcap stock to buy: UBS sees 45% upside on this steady compounder
UBS said the market under-appreciates Eureka Forbes' scale advantages in water purifiers and services. Eureka Forbes fell over 1 per cent to hit a low of Rs 440 on BSE today.
- Mar 13, 2026,
- Updated Mar 13, 2026 11:30 AM IST
Foreign brokerage UBS on Friday initiated coverage on consumer hygiene company Eureka Forbes Ltd with a 'Buy' rating, underpinned by four drivers. Calling Eureka Forbes a steady earnings compounder, UBS noted that the favourable top-down tailwinds place the underpenetrated water purifier category at an inflection point.
It cited Eureka Forbes' stepping up of investment in capex, R&D and product innovation, which could drive 150 basis points market share gain in water purifiers over FY25-28E. UBS also sees scale-up of the higher-margin service (annual maintenance) and filter businesses, which it feels can drive 250 basis points margin expansion in FY25-28E.
Lastly, the foreign brokerage said vacuum cleaners/air purifiers may witness an 18 per cent revenue growth compounded annually over FY26-30E, due to low penetration (less than 2 per cent) and rising health and hygiene awareness.
"We believe the market under-appreciates Eureka Forbes' scale advantages in water purifiers and services. We forecast revenue/Ebitda CAGRs of 13 per cent/22 per cent in FY25-28 and value EFL at 36x 12-month forward PE (March 2027E), with a PT of Rs 640," UBS said.
Shares of Eureka Forbes, fell over 1 per cent to hit a low of Rs 440 on BSE today. At this price, UBS' target price suggests 45.45 per cent potential upside ahead.
The stock is down 14 per cent in the past on year.
The foreign brokerage said water purifier market by revenue is Rs 5,400 crore in size, which could reach Rs 9,600 crore by FY30, growing 12 per cent annually, on improving penetration, rising health and hygiene awareness, and lower total cost of ownership, supported by a 2 times longer filter life.
"The target customer base is also expanding 9 epr cent annually, led by rising incomes, further aided by urbanisation and family nuclearisation. We expect EFL to outgrow the market and gain a EPS (UBS, diluted) (Rs) 150bp share, supported by product innovation (30+ new SKUs in FY25), smart features and design," UBS said.
Eureka Forbes' brand equity, with Aquaguard a virtual synonym for water purifiers, further strengthens its competitive position, it said adding that Eureka has unique moat in water purifiers, with limited competition.
"Water purifiers have a relatively small TAM (
Foreign brokerage UBS on Friday initiated coverage on consumer hygiene company Eureka Forbes Ltd with a 'Buy' rating, underpinned by four drivers. Calling Eureka Forbes a steady earnings compounder, UBS noted that the favourable top-down tailwinds place the underpenetrated water purifier category at an inflection point.
It cited Eureka Forbes' stepping up of investment in capex, R&D and product innovation, which could drive 150 basis points market share gain in water purifiers over FY25-28E. UBS also sees scale-up of the higher-margin service (annual maintenance) and filter businesses, which it feels can drive 250 basis points margin expansion in FY25-28E.
Lastly, the foreign brokerage said vacuum cleaners/air purifiers may witness an 18 per cent revenue growth compounded annually over FY26-30E, due to low penetration (less than 2 per cent) and rising health and hygiene awareness.
"We believe the market under-appreciates Eureka Forbes' scale advantages in water purifiers and services. We forecast revenue/Ebitda CAGRs of 13 per cent/22 per cent in FY25-28 and value EFL at 36x 12-month forward PE (March 2027E), with a PT of Rs 640," UBS said.
Shares of Eureka Forbes, fell over 1 per cent to hit a low of Rs 440 on BSE today. At this price, UBS' target price suggests 45.45 per cent potential upside ahead.
The stock is down 14 per cent in the past on year.
The foreign brokerage said water purifier market by revenue is Rs 5,400 crore in size, which could reach Rs 9,600 crore by FY30, growing 12 per cent annually, on improving penetration, rising health and hygiene awareness, and lower total cost of ownership, supported by a 2 times longer filter life.
"The target customer base is also expanding 9 epr cent annually, led by rising incomes, further aided by urbanisation and family nuclearisation. We expect EFL to outgrow the market and gain a EPS (UBS, diluted) (Rs) 150bp share, supported by product innovation (30+ new SKUs in FY25), smart features and design," UBS said.
Eureka Forbes' brand equity, with Aquaguard a virtual synonym for water purifiers, further strengthens its competitive position, it said adding that Eureka has unique moat in water purifiers, with limited competition.
"Water purifiers have a relatively small TAM (