Eureka Forbes Ltd is Rated Hold by MarketsMOJO

Current Rating and Its Implications

MarketsMOJO's 'Hold' rating for Eureka Forbes Ltd indicates a neutral stance on the stock, suggesting that investors should maintain their existing positions rather than aggressively buying or selling. This rating reflects a balanced view of the company's strengths and challenges, based on a comprehensive evaluation of quality, valuation, financial trends, and technical indicators.

Here's How the Stock Looks TODAY

As of 27 December 2025, Eureka Forbes Ltd holds a Mojo Score of 68.0, placing it firmly in the 'Hold' category. This score reflects a slight decline from the previous 71 points when the rating was last updated on 24 November 2025. The stock's day change is modestly negative at -0.19%, while its longer-term returns show a more encouraging picture, with a 1-month gain of 7.48%, a 3-month increase of 11.61%, and a year-to-date return of 9.95%. Over the past year, the stock has delivered an 8.31% return, signalling moderate appreciation for shareholders.

Quality Assessment

The company's quality grade is assessed as average. Eureka Forbes Ltd exhibits a low Return on Equity (ROE) of 3.17%, indicating limited profitability relative to shareholders' funds. This low ROE suggests that the company is generating modest returns on invested capital, which may temper investor enthusiasm. However, the company maintains a very conservative capital structure with a Debt to Equity ratio averaging zero, reflecting minimal financial leverage and reduced risk from debt obligations.

Valuation Perspective

Valuation metrics for Eureka Forbes Ltd are considered fair. The stock trades at a Price to Book Value ratio of 2.7, which is at a discount compared to its peers' historical averages. This valuation suggests that the market is pricing the stock reasonably relative to its net asset value. The company’s ROE of 4.1% combined with a PEG ratio of 1.8 indicates that while earnings growth is present, it is not exceptionally rapid relative to the stock price. Investors may find the valuation attractive for a stable, albeit modestly growing, business.

Financial Trend Analysis

Financially, Eureka Forbes Ltd shows positive trends. Operating profit has grown at an impressive annual rate of 91.47%, signalling strong operational momentum. The latest quarterly results reinforce this trend, with a Profit After Tax (PAT) of ₹62.90 crores, representing a 49.9% increase compared to the previous four-quarter average. Operating cash flow for the year reached a peak of ₹246.00 crores, while the Return on Capital Employed (ROCE) for the half-year stood at 5.53%, the highest recorded. These figures demonstrate improving profitability and cash generation, which are positive indicators for the company's financial health.

Technical Outlook

The technical grade for Eureka Forbes Ltd is bullish, reflecting positive momentum in the stock price and favourable chart patterns. Over the past three months, the stock has appreciated by 11.61%, and the one-month gain of 7.48% suggests recent strength. Despite a slight dip of 0.19% on the day, the overall technical signals support a stable to positive outlook in the near term.

Risks and Considerations

Investors should be mindful of certain risks associated with Eureka Forbes Ltd. Notably, 53.66% of promoter shares are pledged, which can exert downward pressure on the stock price during market downturns. Additionally, the company's management efficiency remains a concern given the low ROE, which may limit upside potential. While the company is the second largest in its sector with a market capitalisation of ₹12,376 crores and contributes nearly 8% to the sector, competitive pressures and sector dynamics should be monitored closely.

What This Rating Means for Investors

The 'Hold' rating advises investors to maintain their current holdings in Eureka Forbes Ltd without initiating new positions or liquidating existing ones. This recommendation reflects a stock that is fairly valued with moderate growth prospects and some operational challenges. Investors seeking stability with modest returns may find this stock suitable, while those looking for aggressive growth might consider alternatives. The balanced financial and technical indicators suggest that the stock is unlikely to experience significant volatility in the near term, but also may not deliver outsized gains.

Sector Position and Market Context

Within the Electronics & Appliances sector, Eureka Forbes Ltd holds a significant position as the second largest company by market capitalisation, trailing only LG Electronics. Its annual sales of ₹2,590.34 crores represent 5.64% of the sector's total, underscoring its relevance in the industry. The sector itself is competitive and subject to evolving consumer preferences and technological innovation, factors that investors should consider when evaluating the stock's future potential.

Summary

In summary, Eureka Forbes Ltd's current 'Hold' rating by MarketsMOJO, last updated on 24 November 2025, reflects a stock with average quality, fair valuation, positive financial trends, and bullish technical signals as of 27 December 2025. While the company demonstrates strong operational growth and improving profitability, challenges such as low ROE and high promoter share pledging temper the outlook. Investors are advised to monitor the stock closely and consider their risk tolerance and investment horizon when making decisions.

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