Ladies and gentlemen, good day and welcome to the Eureka Forbes Limited Q1 FY 2027 Earnings Conference call. We have Mr. Pratik Pota, Managing Director and CEO, and Mr. Gaurav Khandelwal, CFO, Eureka Forbes with us. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. Before I hand it over to Mr. Pratik Pota, please note the disclaimer. Certain statements made by management in today's call may be forward-looking statements. These forward-looking statements reflect management's best judgment and analysis as of today. The actual results may differ materially from the current expectations based on a number of factors affecting the business.
I now hand the conference over to Mr. Pratik Pota. Thank you, and over to you, sir.
Good afternoon, and I welcome you all to the Q1 FY 2027 earnings call of Eureka Forbes Limited. The operating landscape in quarter one continues to be impacted by inflationary pressures and currency volatility and the associated uncertainty. Against this backdrop, I am pleased to share that we delivered a solid start to FY 2027. Revenue for the quarter grew by 15.3% year-on-year to INR 701 crore, supported by accelerated and broad-based growth across the product business, especially water. The water purifier category grew by high teens on the back of a double-digit volume growth. Emerging categories also delivered strong growth, especially on robotics and softeners. Overall, our product business grew by late teens, and this growth was also broad-based across channels, with retail, direct, and e-commerce all delivering strong double-digit growth.
In water purifiers, our growth was driven by strong momentum in the economy range by our expanded range of stainless steel products, and also by our premium offerings in hot and UTC and IoT. Our growth was well ahead of the category, leading to healthy market sharings across the board. Our emerging categories continued to perform well during the quarter, with strong growth across all emerging categories. Within this, robotic vacuum cleaners delivered strong growth driven by increasing premiumization and shift towards a fully automatic cleaning product. We recently launched a new campaign featuring Shraddha Kapoor for robotics, aimed at accelerating category adoption and strengthening our leadership in this fast-growing category. Water softeners also reported strong double-digit growth, reflecting the growing relevance and the potential of the category. In service, revenue growth tracked at levels seen in the recent quarters.
The price increases implemented in AMC led to some moderation in bookings growth. Our filter portfolio grew well in quarter one. During the quarter, we further stepped up on awareness campaigns on the importance of installing genuine Aquaguard filters that in turn helped drive growth in filters. We will stay focused and continue to invest in driving awareness and changing customer behavior. Additionally, our service KPIs remain strong, and we rolled out a series of digital interventions aimed at improving the customer experience. On the profitability front, the adjusted EBITDA margin, given at 10.5%, a decline of 46 basis points year-on-year, primarily due to a moderation in gross margins and our planned and deliberately higher growth investments.
That said, the underlying drivers of profitability, namely healthy gross margins, operating leverage, and ongoing productivity initiatives remain absolutely intact and continue to provide a strong foundation for the business. We keep investing in driving growth while simultaneously driving stronger execution, productivity, and cost efficiencies. As shared earlier, we expect full year EBITDA margins to be broadly in line with last year. Looking ahead, given the strong start in quarter one, we are confident of delivering a clear step-up in our FY 2027 full year growth. All of our categories are seeing healthy momentum, and we have strong plans lined up for the future. We believe that the long-term opportunity across all our categories remains significant, supported by low penetration levels and increasing consumer preference and awareness of health and hygiene solutions.
We will continue to invest behind our brands, our innovations, and strengthen our distribution capabilities as we progress through the year. With that, let me hand over to Gaurav for more details on our financial performance.
Thank you, Pratik, and good afternoon, everyone. I will begin by covering our financial performance for the quarter. Revenue for the quarter stood at INR 701 crore, registering a growth of 15.3% year-on-year. The growth was broad-based and supported by continuing momentum across our product portfolio with steady contribution from the emerging categories. Our product business delivered growth in the high teens driven by strong performance in water purifiers. The growth was largely fueled by double-digit volume growth and calibrated price increases at the start of the quarter. Emerging categories also sustained growth momentum led by a higher mix of premium products in robotics and volume-led growth in water softeners. Our service revenue growth was largely in line with the past few quarters trends. Moving to profitability. Our gross margins continue to demonstrate resilience despite a dynamic operating environment.
Gross margins for the quarter stood at 58.4%, lower 131 basis points year-on-year, reflecting the impact of higher commodity costs and adverse currency movements. While the cost environment remains challenging, we are yet to see any meaningful reduction in input cost. Our focus will be on driving our cost savings program and product mix. Moving on to operating expenses. Employee cost stood at INR 90 crore, an increase of 10.7% year-on-year. The year-on-year movement primarily reflects normal annual increments. We expect employee cost efficiencies to kick in over a period of time, supported by productivity gains. ESOP charges increased by 16.2% year-on-year to INR 6.6 crore, primarily attributable to fresh employee grants and expanded ESOP coverage as part of our talent attraction and retention strategy.
Service charges grew by 2.7% year-on-year to INR 83 crore, reflecting the relatively softer growth in the underlying service bookings to some extent and our ongoing initiatives to curb leakages. Other expenses, which include A&SP spends, grew by 21.4% year-on-year to INR 162 crore. This increase is primarily due to higher advertisement and sales commission expenses, with its investments focused on strengthening in-store presence in modern retail. As a result of the above, adjusted EBITDA for the quarter grew by 10.5% year-on-year to INR 74 crore, with adjusted EBITDA margins at 10.5%. Adjusted PBT for Q1 came in at INR 61.5 crore, while reported PAT grew by 44% to INR 55 crore. During the quarter, the company recognized a one-time gain of INR 19.5 crore on account of reversal of gratuity expense. Adjusting for this one-off reversal, pre-exceptional PAT grew by 6.1% year-on-year to INR 41 crore.
Turning to the balance sheet, we ended the quarter with a net cash surplus of INR 425 crore. Our focus continues to be on maintaining a strong balance sheet while investing selectively in areas that can support long-term growth. We remain committed to generating healthy cash flows and sustaining strong capital efficiency metrics. To summarize, quarter one reflects a strong start to our FY 2027, a result of strong execution by the company. Looking ahead, in a continuing uncertain environment, our focus will be on stepping up growth for the full year. We will continue to remain vigilant on costs, and our focus will be on cost efficiencies and productivity improvements with the aim to maintain margins in line with last year. With that, I hand it back to the moderator and open the floor for questions. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Siddhartha Bera with Nomura. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, first question is on the service business. While we have seen a very strong momentum and probably improved momentum in the water purifier and other businesses, I think service growth may have been flattish to a very marginal growth, in my assessment for the quarter. Some sense when should we see some pickup here given the initiatives we did last year? If you can also highlight what is the amount of price increases which we took in the AMC, and that should ideally reflect in a better growth also going ahead. Some thoughts there is the first question.
Siddharth, thank you for the question. I think like I said in my opening remarks, our service revenue growth flattened and came in at similar levels as earlier quarters. When it comes to service bookings however, given the price increase that we took, we did see some deferral and some postponement of AMC renewals, which we expect to reduce and mitigate and normalize over time. Our price increase that we took differs from the price increases for a singular AMC versus a multiyear AMC. The price increase, the band was roughly between 3%-12%. We have, as you are aware, a number of initiatives going on on driving our service revenue. We have a lot of targeted interventions aimed at customers who are due for AMC renewals.
We also have a very focused work stream aimed at customers who are out of warranty or out of AMC, but who have a service [request or a complaint] . When they land onto our website or they call us, there is a very clear effort in that converting them into an AMC user. In parallel, we also, as you are aware, have stepped up our efforts on driving our filter business.
Last quarter, end of last year, we had launched a simplified assortment of filters. We had gone down from 65- odd filters to five universal filter kits, which are there in the market. We also had reached out to the open ecosystem of distributors of filters and spares and created a new distribution system that targeted this market. We are seeing some encouraging signs there as well, and we expect this to pick up as we go forward.
Siddharth, also... Hi, this is Gaurav. I think just to clarify, I think you made a point that in your assessment, service revenue growth was flat. No, that is not the case. The revenue growth that we have seen in our service business is very similar to the growth that we saw in quarter four. I think important to call out and that you have noticed as well in the annual reports, there is a deferred liability balance increase that is there, and that is an annuity stream which starts coming into FY 2027. From a revenue growth standpoint, the service business has indeed grown in quarter one, but at levels which are similar to quarter four.
Got it, sir. Second question is on the price hike. While you mentioned that costs have remained steady, in terms of price hikes, are we planning to take any further price hikes? How are we planning to manage the elevated costs which are there in the current quarter?
See, our currency at this point in time is that there is a momentum that is there in the category and across all the categories in which we are operating. Hence, we are going to be very calibrated and measured about any price hikes. Yes, while we may not have fully covered for the cost increase in percentage terms, in absolute terms, we have indeed covered for it. We will be watching the cost very closely and there are ongoing initiatives to offset the impact of cost as we go ahead. But at this point in time, we are going to be more measured as far as consumer price increase is concerned because we see a very strong tailwind as far as growth is concerned and our bias will be towards not disturbing that. How do we then drive efficiencies from other parts of the business to keep margins?
I think the best reference point is you look at quarter one gross margins. We are at 58.4%. Combination of business mix, our portfolio standing across different price points, I think all of it just helps in managing our gross margins.
Got it, sir. Sir, last question is on the A&SP. I mean, overall, other expenditure is up 21% year-over-year. So how much would have been the A&SP growth in the current quarter if you can just highlight the numbers?
Siddharth, we don't give out the segregation for other expenses. But you can attribute almost the entire increase that has happened in other expenses to be mostly led by A&SP. I think within that, if I were to make it even sharper, it's being driven largely by our investments within store. So you will see a lot more of Eureka Forbes in retail outlets now. It's been very focused investments in driving in-store investments and consequently the growth.
Got it, sir. Thanks a lot. I will come back in the queue .
Thank you. Our next question comes from the line of Keshav Lahoti with HDFC Securities. Please go ahead.
Thank you for the opportunity. We are happy to see the accelerated growth. Just want to get a sense on this growth. This time after a long we are seeing a pricing action. Out of this 15% growth, how much could be pricing-led in your view?
Keshav, thank you. We are happy with the pickup and acceleration in the growth. As I mentioned earlier, this growth has been broadly across all our categories. What was most encouraging for us was to see the strong turnaround in water purifier growth. We grew by high teens, like I said, and it was on the back of double-digit volume growth. Therefore, what we saw clearly was a volume-led growth in the case of water with some impact of price coming through. We are also happy to have grown ahead of the market and therefore gained some market share. When it comes to our cleaning portfolio, and it was about robotics specifically, the growth was more led by premiumization where our top-end products, the fully automatic cleaning station that we had launched last year, did exceptionally well and that drove a shift in mix towards the premium segment.
In the case of softener, the other emerging category, there was a strong volume tailwind that helped us drive growth. It was for water and for softener it was much more volume-led. In the case of robotics, it was a change in mix towards the premium which drove the growth.
Got it. Thanks, sir. On service you highlighted your growth is more in line with last quarter. In spite of you taking a price hike of 3%-12%. Still, the growth is not picking up. Is it more like a deferral of service revenue or possibly the renewal that is deferred is more like a lost revenue? How should we read , or possibly we will get some sort of a pent-up demand ? When should we expect the service to hit the double-digit mark? Last question on service side: earlier you used to talk double-digit growth on service revenue which we have not heard this time. Has the scenario changed?
Keshav, on service, typically like you mentioned and in my earlier response, we had taken a price increase between 3%-12% for a single year and a multi-year AMC. We saw that while in the case of product, our price increases went through reasonably smoothly. When it came to our AMC, we found some of our customers postponing their purchase of AMC and waiting for a little bit more time before opting for the AMC. That led to the overall booking growth being softer than what we would have expected, what we would have liked.
Have you seen any revival in the service part in this quarter? Because ideally, if our growth continues at 6% kind of a number, what we delivered, and possibly pricing could have a 4%, 5% growth also, it would be easily hitting the double-digit mark.
I think, Keshav, I'll just make one call-out. What you're referring to is the bookings growth. The revenue growth comes in with a bit of a lag because typically the AMC tenure is of 18 months. So there is a lag effect which comes into play as far as AMC bookings are concerned and translating into AMC revenue. So there will be that lag effect which will come into play. Also, I think just to draw attention that from our perspective, there are two drivers to service revenue. One is AMC, the other is driving the filter sale portfolio.
That is an important part of our portfolio because that is helping us in capture the customer at a stage where maybe the customer has chosen not to opt for an AMC or at a stage where the customer maybe does not want to renew an AMC and is waiting out. So that's the other pivot that we've done nearly seven months, eight months back. That is where the focus is, and that is an area where we are investing a lot in driving awareness, and that is an area where we continue to see growth.
Got it. One last question from my side. What will be the ESOP expense expected for this year?
We expect ESOP to be in the range of INR 25 crore - INR 26 crore. It should be in that range.
Okay. Thank you.
Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, you are requested to please limit yourselves to two questions only. If you have any further questions, please rejoin the queue. Our next question is from the line of Umang Mehta with Kotak Securities. Please go ahead.
Hi. Thanks for the opportunity and congrats on a strong top-line print. My first question was on product. It had two parts. First is the price hike that you have taken. How is it relative to what peers have taken water purifiers? The second part to it was the recently launched three -year filter life products of peers. Any thoughts on that? Any plans internally? Anything you can share? That is my first question.
Umang, thank you for these three questions and for your compliment. On your first question, the price increase that we took, our peers followed with a lag with almost a similar price increase. Though, like I said, there was a lag, and I think there was roughly a 30-day period when we had pricing ahead of the others. But now, as things stand today, there is again price equilibrium versus competitors. On your second question, I think it is important to take a step back and look at the water category and water purifier category. We know that in a country like ours, with the water quality that we have, this category has an extremely low penetration, just about 7%. One of the barriers that we know to be a big one, a significant barrier, is the perceived high cost of ownership.
Anything that addresses and tackles this barrier of the high TCO will help drive category growth and will help get new customers in. Knowing that, as Eureka Forbes, we have done a number of things to reduce the TCO and get new customers in. Going back to three years ago, we had launched our segmented AMCs, our tiered AMCs, with AMCs starting as low as INR 699 to again reduce the perceived cost of ownership, number one. Number two, last year, we launched the largest range of water purifiers with two-year filter life, and that helped us again reduce the cost of ownership and attract new customers. As we said earlier, about 70% of customers who entered into this portfolio are first-time category entrants. So that really helped us grow the category.
More recently, about 45 days ago, we were the first in the country to launch water purifiers with a four-year life. We launched two products in e-commerce, Aquaguard ASPIRE Glow 4X and Aquaguard ENRICH Ritz Pro 4X with stainless steel, priced at roughly INR 22,000 and INR 25,000, respectively, and they are met with a very positive response. Just to underline the fact that we did this about 45 days back, and our competitors followed more recently. So we were the first in the market, more generally in mind. Anything that helps unlock category barriers, that helps get new entrants in, and therefore helps grow the category, will always be to our advantage as the largest and the most trusted brand in this category. So our sights are focused on growing the category, and we will do what it takes to reduce the barriers towards that.
Sure, Pratik. Very heartening to know. My second question was on service. You mentioned about the hikes, right? I just wanted to understand the rationale behind taking them, considering that we've accepted in the past that its pricing was a barrier, right, in terms of AMCs. So why now? The second question was linked to it is standalone spares and filters. If you can highlight at least started to see some traction for the new kits. Any growth numbers that you can highlight? Thanks.
Umang, I'm sorry. I didn't hear the second part of the question. Can you repeat that, please?
The standalone spares and filters outside the AMC. Any growth numbers that you can highlight, whether the new range has started to see some traction?
Got it. No. Thanks, Umang. Let me answer your first question on the rationale for price hikes. Look, as you imagine, we have a whole portfolio approach when it comes to pricing. Specifically in service and in AMC, we have not had price increase for quite some time. In that intervening period, we have seen inflation across fuel, inflation in labor, and we've not passed it on to consumers. I think things reached a point more recently after the war, et cetera, when we could not hold on to that any longer. Even within that, we did our pricing increase in a very calibrated way with a lot of analytics on what customer segments were price sensitive and which were not. That led to a price increase. Yes, unless in products, in service, we did see some impact of the price increase in terms of fresh bookings.
That is more a deferral. People are waiting for some more time before they renew the AMCs, and we expect, like I said earlier, this impact to mitigate and to normalize over time. On the second question that you had, which is about our non-AMC filters and spares. As I mentioned earlier, and you are aware, we have done a number of things, including launch a very simplified portfolio, driving a new distribution system and most importantly, driving enhanced inputs for consumer awareness. Our digital campaigns have been sustained and in fact increased in quarter one. We also launched a campaign which was targeted the consumers, a digital campaign. We talked about, the line was Stop, Check, and Relax about asking customers to stop the technician and check what filter was being installed before they let it go ahead. I think both campaigns have helped us.
We have seen some encouraging signs on filters, and as Gaurav said earlier, we are seeing that part of the business grow well, and we have optimism and we believe strongly that this part of the portfolio will keep growing in the quarters to come.
Got it. Thank you so much, and all the best. I will fall back in the queue.
Thanks a lot.
Thank you. Our next question comes from the line of Achal Lohade with Nuvama Institutional Equities. Please go ahead.
Yeah, good afternoon, team. Thank you for the opportunity. Sir, two questions. If you could call out what is the A&SP spend absolute for the current quarter and the last year same quarter? And what kind of spend we are looking at for the full year?
Yeah. Hi, Achal. Achal, so we don't give the breakup at a quarterly level as far as the A&SP spend is concerned, but I think I'll give some color on this. I think first, at an overall year level, we do expect our A&SP spends to be ahead of revenue growth. So that is something that we are planning for. Point number two, bulk of the spends are going to be directed very specifically on two things. One is in-store presence, which is our availability and our visibility inside the stores, having more promoters, et cetera. And the second part is in driving more consumer finance adoption. And you will see that the common pattern in both of them is that it's about getting more and more consumers to convert into an Aquaguard purchase. So going to be very focused investment that we will be doing.
Over the past couple of years, we believe we've invested adequately behind the brand, and we believe now is a stage where it's about converting the customer at the point of purchase. But this picture, you should expect our A&SP spends to increase ahead of revenue growth as far as FY 2027 is concerned, but in very targeted cases.
Understood. The second question I have just on the services piece. There are two parts to this question. One, you mentioned about the liability part which will get recognized in FY 2027 given the deferral accounting. If you could clarify on that in terms of whether it will have a substantive impact on the overall services growth for the year. Number two is that given the weaker bookings, did that help in terms of protecting the margins? Because last year, even it was the initial year for the services piece you had called out that the upfront impact is actually more negative than positive at the EBITDA margin. If you could clarify on both these aspects, please.
Yes, Achal. On the first question, yes, the service liability does help in getting revenue in FY 2027 and consequently driving growth. At this point in time, the visibility that is there is that we do expect our growth to continue beyond quarter one as well.
Having said that, for a revenue growth to translate, it does require in-year bookings to come in as well. Given that there is a relative softness that we've seen, and these are initial signs that we've seen as far as AMC bookings are concerned, that impact would play out towards the later part of the year. Having said that, at the same time, we continue to see growth in our filter business. There is that compensating effect which is there. The big picture at this point in time, the visibility that we have is that from a service revenue growth perspective, we expect our Q2 level growth to be similar to what we've seen in Q1 and not very different. But beyond that, we have to see how bookings go and how the filter business scales up.
To your second question on software bookings, whether it helps in service charge. Yes, it does indeed help to some extent, and there is a translation of that in the service charge increase. There is an element which comes into play, but it is not a very large impact to drive overall profitability for the quarter.
Got it. Just a clarification on the filter business. Does it come with a similar margin, or it comes at a slightly lower margin?
From a gross margin perspective, it is slightly lower than AMC, but not very off. Filter is also a relatively high gross margin business.
Got it. Thank you. I have more questions, but I will come back in the queue. Thank you.
Sure. Thank you.
Thank you. The next question is from the line of Sameer Gupta with IIFL Capital. Please go ahead.
Hi. Good afternoon, everyone. Thanks for taking my question. Firstly, sir, you had mentioned in the products business on the market share gains aspect. Just trying to understand, is there any angle here of other players who might be struggling due to some supply chain disruptions that happened in 1 Q because of the West Asia crisis, which might have resulted in this quarter's peak market gain? Or is it more organic, your own initiatives and efforts which are leading to this gain?
Sameer, t hank you for the question. Our market share gain in quarter one, in Water, came on the back of strong consumer propositions, enhanced investments in points of sale through greater promoters, more visibility, and disciplined execution. There was no element of a supply constraint from anybody else which led to this increase. It was a very competitive playing field in quarter one, like it has been in the past, and it was in that context that we gained market share.
Got it, sir. That's very clear. Second question is, in the initial remarks you mentioned about EBITDA margin for this year, whether the aspiration to make it in line with last year. You also mentioned that the price hikes taken, there is no real plan to take any more as long as the absolute is covered. A&SP also, you plan to do more than revenue growth. Just wondering how the margins would be maintained. Is it a year where you would like to squeeze the cost, or there are some optimization programs in place specifically for this year? Just some color on that aspect, sir.
Yes, Sameer. It is a great question. Before I get into the full year view, I think just for clarity, when you look at the quarter one margins, you see a drop of roughly 50 basis points. You would have noted something similar even in last year. The reason for that is we consciously upfront our growth investments. That is a very conscious choice so that we get the full impact during the course of the year. Hence, to that extent, quarter one for us is always a more than usual increase in A&SP spend that we do. That is point number one. The reason why I am calling it out is that it will not be a similar trajectory in every single quarter. That is one.
Having said that, I think two or three points, definitely we have got multiple cost workstreams at play, covering both COGS and our operating expenses. That is an ongoing exercise, and our focus is on driving efficiencies to come into play. The second is a higher growth definitely leads to operating leverage. Even if you were to disaggregate this particular quarter, you see a margin drop of 46 basis points. There is a 131 basis points of gross margin drop, which is there. Despite the higher A&SP investments, you see operating leverage compensate everything else. That is the math which is there. On one hand, you have got a gross margin drop and a higher A&SP investment, but growth is making sure that operating leverage is addressing most of it.
We believe that with a combination of stepped-up growth that we are quite confident of and our ongoing cost initiatives covering both COGS and OpEx, we should be able to land margins in line with what we are aiming for. As the best reference point is same time last year, where we started the year with quarter one margins being down 50 basis points year-on-year, but we ended the year with a margin expansion of nearly 55 basis points.
That is very clear, sir. Just one last question, if I may squeeze in with your permission.
Yes, go ahead.
Yeah. Thanks. I know it might be a far-fetched scenario, but just in case the prices were to correct, what would be our approach? Do we take reversal of the price hikes that we have already taken? How does this work in this industry? Is it like whatever price hikes are done and whenever the commodity costs correct, that is your gain to be add in the P&L, or you do pass it on in some ways, maybe not MRP, but in some other ways?
No, Sameer. That's a great question, and I love your optimism. We are equally hopeful that some of the cost increases that we have seen start correcting. If and when it does, you can be sure that we will do whatever it takes to drive growth. As I said to you, and you know this, not your earlier question, we operate in a competitive category. Therefore if costs correct, we have to pass them on to the consumer and make sure we stay competitive and drive growth and market share.
Got it, sir. That's all from me. Thanks, sir.
Thank you. Our next question comes from the line of Vikram Kotak with Ace Lansdowne. Please go ahead.
Yeah. Thank you. Thanks so much, team. I have two questions. One is to our journey to 2030 on the EBITDA and sales, where are we right now and what juncture we are in terms of expanding product portfolio and also building the B2C platform? That is my question number one.
Vikram, thank you for the question. As you are aware, and as you just mentioned, we had talked about our ambition for FY 2030, both on growth and in profitability. With the performance that we delivered in quarter one and with the plans that we have lined up for the rest of the year and beyond, we are confident of delivering to that ambition through FY 2030, both when it comes to top line and when it comes to profitability. So our ambition of 2x revenue from FY 2025 -F Y 2030 and 3x EBITDA in the same period remains the north star for us. We remain confident of delivering that. When it comes to our B2C ambition, again, just to step back and remind ourselves why B2C becomes relevant in our context even more so.
We were, and we are in many ways India's oldest B2C company, or even a very physical way that we have access to consumer zones. We have had access for 40 years now, both in the direct sales context and also in the regular support servicing context. We have the first-party data of 15 million customers, and we know their needs. We know we have the data and can analyze their requirements, et cetera. These are happy customers. These are customers who trust us. So by building our B2C, we also have, as you are aware, a strong digital platform which we have built in the last three years. We have nearly 2.5 million monthly active users. That is organic traffic. That is very, very valuable. So our objective is to ensure we use these assets and the strengths that we have got to drive increased cross-selling.
Our multiple category ownership is less than 1% right now. How do we make sure that we drive cross-category and cross-selling to our installed base of users? Also to drive faster upgrades and replacements of our product base. That is the strategic logic behind driving B2C. We are happy with the progress we made. Both last year and even in quarter one, we saw strong growth come to us from our B2C engine, and we have got specific set of initiatives in play for the balance of the year to scale this up even further. As you can imagine, this asset and this base of customer data is not available to most other global companies and certainly not to our competitors. Therefore, we find it very, very valuable, and we intend to increase our B2C play in the quarters to come.
Right. Second question on the robo vacuum cleaner, the new market, not very old market, and very preferred by the Gen X and the people who are working class. Where do you see clearly in this market? Because right now I see a product ranging from INR 10,000 - INR 130,000 and they are imported. Eureka Forbes is the strongest player. How do you see competitive landscape in three years? What is your way to the USP? Certainly, you are a great value guy. You are a great customer service company. But where do you see here a landscape? Is pricing need to go down? How do you envisage the three year from now, the robo market looks like a great category, but I think how the pricing, how the competitive intensity, how the landscape will play out. Can you throw some light on that? It's a very long-term question.
Thank you.
No, thanks, Vikram. That's a really good question. That question very close to my heart. Robotics as a segment, as you mentioned, is a segment in momentum. It delivers a convenience and a solution which is analogous in many ways to washing machines or washing machines delivered 25 years, 30 years back.
Yeah.
It replaces manual labor. It gives a plan B for the homemaker when the maid doesn't turn up.
Yeah.
This category has grown consistently across the country. This category, and I think the greatest tool of its potential, is the fact that this category has now moved from being a merely online category to now growing aggressively offline as well. We have seen modern trade chains show significant growth, both the national chains as well as the regional chains. We have seen all the top and traditional trade outlets also show strong growth and traction for that category. I think this category is going to be momentum. As the market leader in this category, our right to win comes from three or four things.
The first one is ensuring we have a full portfolio play in this segment, because there is a customer, like in all categories, who is a value-conscious consumer looking for a very specific plan B solution, which is convenience when needed, cleaning when needed. To a customer who wants a fully automated, fully convenient cleaning solution, which may end up being their plan A itself. They may not have domestic help to come to clean. That will span a price point from between INR 15,000- INR 75,000, INR 80,000, INR 1 lakh, like you said. We intend to have a portfolio that spans the entire continuum, much like we do in water right now. Therefore, our right to win comes from having that full stack portfolio, number one.
Number two, an understanding of the Indian consumer need and the Indian consumer cleaning needs and the oscillating functionalities and features which speak to that. For example, corner cleaning. For example, cleaning under sofa. Carpet cleaning is not such an important use case for India for obvious reasons, unlike in Europe or in the U.S. But some of the other ways, dust cleaning, very superior dust cleaning efficacy becomes a very important feature for India, for instance.
So A, like I said, a full stack portfolio; B, having features suited for the Indian consumer's needs. Number three, ensuring that we leverage our vast service network, because this is an expensive product. Therefore, customers, when they enter the category, are looking for reliable service, and knowing that there's a service network close at hand. So that's the third part which will give us a right to win. Our own service network that we have across the country, 19,500 PIN codes.
Yeah.
That has been steadily strengthened to service the robotics as well. Fourth, our brand reputation. Eureka Forbes is as strong a brand as Aquaguard, and so bringing that equity to bear will again give us the right to win. Fifth, I think the entire point about D2C, the fact that we have a 15 million database of customers. Many of them would be early adopters of new categories and innovations. I think this is a great chance for us to reach out to them and cross-sell some of these categories. Also, add to that Vikram, the fact that we have feet on street as well. So we have a fleet of direct sales employees and sales persons actually go to the customer home and do a physical demo. A large service network who can do exactly the same thing.
Put all these trends together, I think it becomes a very compelling playbook. Last but not the least, a strong offline presence. Let's say a newcomer who comes, let's say, a Chinese brand comes in.
Yeah.
It's easy for them to play merely online. With an Amazon, Flipkart, they can do that easily. Entry barriers are much lower. When it comes to offline, going to 3,000 outlets across the country, having point-of-sale visibility, having point-of-sale promoters, a core service network, I think that's a very hard strength to replicate quickly. So all of these put together give us, we believe, a strong right to win in this category, and which is exactly why we said that by FY 2030, this will be a INR 1,000 crore business for us going forward.
Oh, that's very passionate and elaborated reply. Thank you. Thank you, Pratik, for that. Thank you so much.
Thank you, Vikram.
Thank you. Our next question comes from the line of Mayur Parkeria with Wealth Managers (India) Private Limited. Please go ahead.
Good afternoon, sir, and thank you for taking my question. I apologize for some noise at the background. I am traveling. If there are more disturbances, please let me know. I hope there's no problem. With that, actually, I had two questions. One is on the long-term plan. Just wanted to understand, given the fact that services business is taking a little bit more time to show up on the revenues growth side, and when we say 2x revenue growth for FY 2030, I am not asking for exact numbers, but from an indexation perspective, is it right to understand that compared to FY 2025, the product revenues will actually grow much faster than the services CAGR, which is going to come? Is it possible to give us some understanding and how will it play out, let's say?
Will the product go 2.5x and this will go 1.5x, o r what based on proportions which we have, what is the right way to look at this as we go ahead in the journey of FY 2030?
Mayur, thank you for the question. I think like you reminded me, and like you said, our FY 2030 ambition is to drive a 2x revenue scale-up versus FY 2025 and a 3x in EBITDA. This will come through growth in our core category of water purifiers and through the growth that we see in our emerging categories, specifically robotics, air purifiers, and water softeners. These categories, as I mentioned in my earlier remarks to Vikram as well, some of these categories are growing very strongly. Robotics, for instance, or indeed air purifiers or water softeners, t hese product segments are growing very strongly. We expect these categories to continue to grow ahead of the average. As we look to FY 2030, between all these categories put together and the service growth, we deliver the revenue that we spoke about, which is 2x.
The service mix may change depending on how the service growth plays out. Just to remind all of us, service is not just AMCs. We have a big opportunity in filters, which will grow well ahead of our AMC growth. The need of filter product is much like any other product. It is in a large span, large market with low penetration, and we have a low market share, but a large right to win. We expect filter growth to clock in ahead of AMC growth, and therefore between them, we expect the 2x revenue to be paid back.
Okay. Including the filters growth, we believe more or less even the services part of that will continue to have 2x. Okay. Thanks, Pratik.
Sorry. Services will grow a healthy pace between AMC and filters, and that is our conviction through FY 2030. Sorry, go on, please.
I have a question on margins, but before that I forgot to say that the commercial on the filters is quite good and I think we have hit the right chords, and hope that the cost of ownership challenges which is there in the overall product, in the water purifier as well as in the services AMC we see. We see that playing out a little bit. You have also mentioned and we see that. Hope as far as the filters are concerned, we get the right pricing as we go ahead. It is a very large gap as we understand. But hope you get the right pricing and the right chord and the commercials do that the right thing. Wish you all the best with that. And a question on margins, especially for this year.
In the past, we have been mentioning that in our journey to 3x profitability growth, the way to look at it is we will see a 50 basis point kind of margin expansion every year as we go ahead in that. Now for this year, specifically in that journey, will it be right to say that for this year that aspiration, Gaurav just mentioned in the last question that the right way to look at is 50 basis points on this excellent first quarter, but we ended with the 50 basis points of highs by the year ended. But for FY 2027, we said that we want to maintain the margins as we go ahead in line with the previous year.
For this year, is it right to assume that the journey will be not there given the cost pressures which we are seeing, or we continue to have the aspiration to increase margins in line with the just the clarification ?
Yeah. No, Mayur, I think from our perspective, the key part has been that over the last three years, we consistently improved margins. That always is our going position that how do we land with a sustainable, profitable growth. I think you will appreciate that this year has been extremely unusual. I think just what has happened on the commodity side and the ForEx side and the ongoing geopolitical crisis which has not shown any signs of coming to a closure. I think it is an extremely unusual year that one is dealing with. And with that context, we believe that being to hold on to margins itself would be a very good outcome to achieve. Because what it does is that with a bigger scale of business as we go into next year, you always get an opportunity then to kind of make up for it.
That is the way we are looking about it. Our going position at this point in time, as I mentioned, is to aim for margins same as last year.
And Mayur, thank you again for the feedback on the advertising campaign . I will convey your appreciation to the marketing team, and I am sure they will be very happy. Thank you.
Thank you.
Thank you. Our next question comes from the line of Anjali Mohata with Melania Family Office. Please go ahead.
Thanks for the opportunity. I have one question. As a category, we can see a lot of new players coming in. What will be Eureka's strategy to defend the existing market share are factored in and how are we going to differentiate our products from our peers? Just adding to this, now that we have increased the cost of AMC, the total cost of ownership of owning a Eureka product also goes higher. What is your outlook on this?
Anjali, thank you for the question. On the first question, I think it's important to first appreciate and recognize, and we believe that very strongly, that if there are more competitors in the category, it creates excitement, it drives innovation, it creates much greater consumer interest, and therefore helps grow the category. In a category like water purifiers which has low penetration, anything that helps stimulate growth I think is great for the category. We welcome all competitors who enter the category. As India's largest and the most trusted water purifier brand, Aquaguard I think is at the forefront of driving innovation and driving category growth. We've got two strategic directions when it comes to water purifiers. The first one is to grow penetration to drive affordability both in terms of cost of entry and then the cost of ownership.
Which is why we have an affordable Aquaguard, called Aquaguard Sure, which is our most affordable Aquaguard and most affordable water purifier in the category, which is aimed at attracting non-users into the category. Equally, we've launched a slew of products with two-year filter life and more recently, like I said earlier on the call, two products in e-commerce with a four-year filter life and a four-year life, and a four-year unconditional warranty. We again address the issue of cost of ownership. That's on the driving penetration part of it and reducing the barriers to entry. Equally, there are customers and consumers who are looking for premium solutions, who are looking for differentiated solutions. For them, we have a range of premium and differentiated offers. Let me give you two examples. We launched a couple of years ago India's first water purifier with instant hot water.
Last year, we launched India's only water purifier that gives hot, cold, and ambient water. We have India's largest range of smart, connected IoT-based water purifiers. We also have a very competitive and advantage under-the-counter product for modular kitchens. Again, both by driving penetration and by driving differentiation and premiumization, we intend to stay competitive and to stay at the forefront of driving growth. I think the last point I want to underline is that when we look at this category, we do not navigate and we do not look at competitors. As category leaders, our sights are focused maniacally on the consumer, looking at what the barriers are, looking what it takes to drive growth and drive behavior change, and that's where we'll remain. Notwithstanding the entry of other players, like I said earlier on the call, in quarter one, we have grown market share.
Just telling you how competitive we are and how focused we are. We have to be agile, we have to be aggressive, we have to be customer and consumer obsessed, and work back from there. We cannot be like an incumbent company. We have to be like an agile startup, and that's exactly the way our entire teams are working.
I do get this, but the numbers from FY 2023 - FY 2026 show the percentage of 11.26% when you grow it per year. Is there any reasonable market share as we are seeing that your approach has varied? The numbers don't show that. If it is-
Anjali, let me. Go on, please. Go. I thought you were finished. Please go on.
No, no, you can please go on.
Thanks for pointing that out. Let me also sort of give you the historical context in this category. This category of water purifiers has seen very little growth in the years until FY 2023. In FY 2024 onwards, when we started doing a number of initiatives, for example, launching India's most affordable Aquaguard, driving consumer awareness about the harmful effects of drinking unpurified water or water purified only by coal filters, that's encouraged seeing category growth. We are seeing an acceleration in category growth over the last few years, not just in water, but also like in the emerging categories.
Looking ahead to the future, you might have seen our presentation on the website that we had the Investor Day, where we've spoken about our ambition of reaching a 2x revenue scale between INR 5,400 crore-INR 5,600 crore by FY 2030, which over a five-year period would have a CAGR of 17%-18%. As I mentioned earlier on the call, that would mean that the PAT would be even higher than this. I think it's important to recognize and remember the context on some of these numbers. But like I said, our focus is on growing and growing by the consumer, and making sure we stay at the edge of innovation and drive growth and drive share.
I'm just squeezing in my last question. What is the plan? How do we increase our operational efficiencies in the upcoming quarters since there's a hike in the AMC prices also? There's going to be less on moderate growth in terms of new customers entering in as an AMCs .
No, Anjali, that's a really good question. Absolutely, as Gaurav mentioned on the call earlier, I think we have a very focused and a very deliberate planned intervention aimed at reducing wastage and driving greater efficiencies. So in every part of the business, we are taking a brutally critical look at all costs and ensuring that we use technology, we use the power of data, make processes as required. More and more and more recently also beginning to use AI to find areas of efficiency. That's a very, very focused work stream which help us drive and reduce wastage and drive efficiencies. So thank you for that question.
Thank you so much for patiently answering all my questions.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Pratik Pota for closing comments. Over to you, sir.
Thank you. Thank you everyone for your questions and for tuning into the call today. I hope we were able to answer the questions and give some of our insights. If you have any follow-up questions or if you need more information, please do circle back to us and to Nupur, and we'll be happy to revert to you. Thank you so much and have a good day.
Thank you. On behalf of Eureka Forbes Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.