Eureka Forbes - Will Advent and Pratik Pota script another value creation story for their investors

In 2017, Jubilant Foodworks Limited faced a daunting crisis. The Same Store Sales Growth (SSSG), which once soared at 37% in 2011, had plummeted to -7.5% by 2016. EBITDA margins had halved from 18% to 9.5%, and PAT margins dropped sharply from 10.5% to a mere 4%. A combination of rising costs for goods sold, escalating rental expenses, fierce competition in Tier 1 cities, and mounting losses from the Dunkin Donuts venture led to a 50% fall in share price—a clear sign of investor discontent.

Enter Pratik Pota, entrusted with the mission of a swift turnaround. Through product innovation, a value-driven menu tailored for Tier 2 and 3 markets, technological advancements, and stringent cost management, Pota spearheaded a transformation. Over five years, Jubilant’s revenue grew by 1.7 times, while profits increased sixfold, fueling an eightfold surge in stock price—a remarkable recovery.

Come 2022, Pratik found himself at the helm of another turnaround project, this time in the water purifier sector. Advent International, after acquiring Eureka Forbes from Shapoorji Pallonji Group, appointed him as CEO, aiming to replicate the turnaround success they had achieved with similar investments—Culligan International in the UK (46% CAGR) and Crompton Greaves in India (26% CAGR). With a proven history of revitalizing consumer businesses, Advent and Pratik set their sights on repositioning Eureka Forbes for growth.

Fast forward to 2024, the early results look promising. In Q2 FY25, Eureka Forbes recorded its fourth consecutive quarter of double-digit revenue growth. Excluding ESOP costs, EBITDA margins rose, thanks largely to rigorous cost optimizations. Net cash levels surged from ₹9 crore in Q2 FY24 to ₹119 crore in Q2 FY25, highlighting a strengthened financial position.

Moreover, Eureka Forbes is now eyeing lucrative opportunities in the air purifier and robotic vacuum cleaner markets. With a good runway of double digit revenue growth coupled with potential of 15% PAT margins, company’s asset-light model and growing AMC business which generates upfront cash, Eureka can create wonders for its shareholders like Jubilant had done in the past.

While it’s still early days for Pratik and his team at Eureka Forbes, the recent quarters signal positive momentum. With his track record and the backing of Advent, Pratik could very well script yet another compelling turnaround story, delivering substantial returns for investors.

Disclosure - Invested in Eureka Forbes and hence opinions may be biased