Eureka Forbes’ FY24 AR primarily highlights its transformational journey during phase-1. We note: (1) Strong investments in distribution expansion (at 36% CAGR over FY22-24) have started yielding positive results (volume growth and market share gains in FY24) and may continue to drive growth in FY24-26E. (2) The company is focusing on category creation to increase penetration via (i) launch of affordable products to attract new customers, and (ii) higher media campaigns. (3) Cost optimisation is leading to EBITDA margin expansion (~420bps expansion over FY22- 24), and (4) Stock option allotment has also been executed at manager level which largely comprises performancebased options.

Outlook

We remain constructive on Eureka Forbes considering the achievements in phase1 of transformation. We raise FY25/26E earnings by 1.9%/2.0%, respectively. Maintain BUY with DCF-based revised TP of INR 660 (implied P/E of 69x on FY26E EPS).