Key Financial Performance (Q1 FY27)

Revenue: Total revenue for the quarter stood at INR701 crore, registering a growth of 15.3% year-on-year (YoY).

Product Business: Grew by high teens YoY, driven by:

  • Water Purifiers: High teens growth, fueled by double-digit volume growth. Growth was broad-based across economy, stainless-steel, and premium (Hot, UTC, IoT) ranges.
  • Emerging Categories: Strong growth across all emerging categories.
  • Robotic Vacuum Cleaners: Growth driven by premiumization and a shift towards fully automatic cleaning products. A new campaign featuring Shraddha Kapoor was launched to accelerate category adoption.
  • Water Softeners: Reported strong double-digit growth.

Service Business: Revenue growth tracked at levels similar to recent quarters. Price increases in AMC (Annual Maintenance Contract) led to some moderation in bookings growth. The filter portfolio grew well in Q1.

Profitability:

  • Gross Margin: Stood at 58.4%, a decline of 131 basis points (bps) YoY, reflecting the impact of higher commodity costs and adverse currency movements.
  • Adjusted EBITDA: Grew by 10.5% YoY to INR74 crore.
  • Adjusted EBITDA Margin: Was 10.5%, a decline of 46 bps YoY, primarily due to gross margin moderation and planned higher growth investments.
  • Adjusted PBT: Stood at INR61 crore.
  • Reported PAT: Grew by 44% YoY to INR55 crore, which included a one-time gain of INR19.5 crore from the reversal of gratuity expense.
  • Pre-exceptional PAT: Grew by 6.1% YoY to INR41 crore after adjusting for the one-off gain.

Operating Expenses:

  • Employee Costs: Stood at INR90 crore, an increase of 10.7% YoY, reflecting normal annual increments.
  • ESOP Charges: Increased by 16.2% YoY to INR6.6 crore, attributable to fresh employee grants and expanded ESOP coverage. Full-year ESOP expense is expected to be in the range of INR25-26 crore.
  • Service Charges: Grew by 2.7% YoY to INR83 crore.
  • Other Expenses: Grew by 21.4% YoY to INR162 crore, primarily due to higher advertisement and sales promotion (A&SP) expenses focused on strengthening in-store presence in modern retail. A&SP spend is expected to grow ahead of revenue for FY27.

Balance Sheet & Cash Flow

The company ended the quarter with a net cash surplus of INR425 crore. The focus remains on maintaining a strong balance sheet while investing selectively in areas that support long-term growth.

Management Commentary & Outlook

  • The company delivered a solid start to FY27 despite inflationary pressures and currency volatility.
  • Underlying drivers of profitability (healthy gross margins, operating leverage, productivity initiatives) remain intact.
  • Full-year FY27 EBITDA margins are expected to be broadly in line with FY26.
  • Management is confident of delivering a clear step-up in FY27 full-year growth, supported by healthy momentum across all product categories and strong plans for the future.
  • The long-term opportunity across all categories remains significant, supported by low penetration levels and increasing consumer preference for health and hygiene solutions.
  • The company reaffirmed its FY30 ambition to achieve 2x revenue and 3x EBITDA from FY25 levels.

Key Strategic Initiatives

  • Driving Growth: Continued investment behind brands, innovations, and strengthening distribution capabilities.
  • Service Business: Focus on targeted interventions for AMC renewals and converting out-of-warranty customers. Driving growth in the filter business through a simplified assortment (reduced from 65 to 5 universal filters) and a new distribution system.
  • Cost Management: Focus on cost efficiencies and productivity improvements to maintain margins.
  • D2C (Direct-to-Consumer): Leveraging first-party data of 15 million customers and a digital platform with 2.5 million monthly active users to drive cross-selling and increase D2C play.

Q&A Highlights

  • Service Business: Price increases for AMC ranged from 3% to 12%, leading to some deferral of renewals. Growth in Q2 is expected to be similar to Q1. The filter business has slightly lower gross margins than AMC but is still a high gross margin business.
  • Pricing Strategy: The company is being calibrated on further price hikes to avoid disturbing growth momentum. The focus is on driving efficiencies to offset cost pressures.
  • Market Share: Gains in Q1 were organic, driven by strong consumer propositions and execution, not competitor supply constraints.
  • Robotics Category: Seen as a significant long-term opportunity. The company's right to win is based on a full portfolio, features curated for Indian needs, a vast service network, brand reputation, and D2C capabilities. Robotics is targeted to be a INR1,000 crore business by FY30.
  • Long-term Growth (FY30): The 2x revenue ambition will be driven by growth in core water purifiers and emerging categories (robotics, air purifiers, softeners). The service mix may change, but growth is expected from both AMC and filters.