Concall AI

EPACK Durable Limited — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

Epack Durable reported a resilient Q1 FY26 despite market headwinds, with revenue growing 14% YoY to INR662 crores. While net profit saw a slight decline of 2% to INR23 crores, EBITDA increased by 6% to INR55 crores, and margins expanded significantly due to an optimized product mix. Diversification efforts showed strong results, with SDA, LDA, and Components segments growing 16%, 29%, and 5-6% respectively, offsetting a 34% decline in the core RAC business. The company also made strategic capex of INR50 crores and added 14 new customers, including an entry into the energy meter sector.

Highlights

Revenue from operations stood at INR662 crores, climbed by 14% YoY.
EBITDA was INR55 crores, increased by 6% YoY.
EBITDA margin reported at 8.24%, expanded by 156 basis points YoY.
Net profit was INR23 crores, declined by 2% YoY.
Net profit margin expanded by 43 basis points to 3.46%.
RAC business witnessed a 34% decline YoY.
SDA segment grew by 16% YoY, LDA segment grew by 29% YoY, and Components segment grew by 5-6% YoY.
Product business contributed 77% of total operating revenue.
Incurred approximately INR50 crores of capex in Q1 FY26.
Added 14 new customers, with supplies commenced to 3 of them.

Key financials

01 Revenue ₹662 Cr +14%YoY
02 EBITDA ₹55 Cr +6%YoY
03 EBITDA Margin 8.2%
04 Net Profit ₹23 Cr -2%YoY
05 Net Profit Margin 3.5%

What they filed

Q1 FY27: revenue up 33.8%, net profit down 47.8% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	377	377	643	662	213 −44%	428 +14%	591 −8%	886 +34%
Expenses	368	354	572	608	214	398	567	833
EBITDA	9	23	71	54	-1 −111%	29 +26%	24 −66%	53 −2%
Margin	2%	6%	11%	8%	0%	7%	4%	6%
Other income	5	5	6	6	6	3	3	2
Interest	14	12	14	16	20	13	11	20
Depreciation	12	12	12	13	14	14	14	17
Profit before tax	-12	4	50	31	-29 −142%	5 +25%	1 −98%	18 −42%
Tax rate	-27%	28%	25%	27%	-22%	49%	97%	33%
Net profit	-8	3	38	23	-22 −175%	3 +0%	0 −100%	12 −48%
EPS	-0.88	0.26	3.93	2.39	-2.31	0.27	0.00	1.23

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

RAC Business
-34% Growth
SDA Segment
16% Growth
Components Segment
5% Growth
Large Domestic Appliances (LDA) Segment
29% Growth
Product Business
77% Contribution to Revenue

Guidance & targets

Profitability

EBITDA Margin Profitability · FY26 · High confidence 7.5% plus

So, in terms of EBITDA margin, we are still targeting an EBITDA margin of 7.5% plus in FY '26 with a medium-term ambition of achieving 8%.

— Ajay DD Singhania
EBITDA Margin Profitability · medium-term · High confidence close to 8%

— Ajay DD Singhania
PLI Accrued Profitability · FY25 · High confidence INR36 crores

Overall, if we see last year, the total PLI, which has been accrued is INR36 crores

— Ajay DD Singhania
PLI Eligible Profitability · FY26 · High confidence INR56.25 crores

whereas for the current financial year FY '25, '26, we are eligible for a PLI of INR56.25 crores.

— Ajay DD Singhania
PLI Profitability · Q1 FY26 · High confidence INR14 crores to INR15 crores

this PLI number on quarter-on-quarter on a year-on-year basis is around INR14 crores to INR15 crores.

— Rajesh Mittal

Revenue

Overall Revenue Growth Revenue · FY26 · Medium confidence 10% to 15% kind of growth (market), EPACK expects to outgrow

the market might see a growth of anywhere between, let's say, 10% to 15% kind of growth is what is expected still from the market. And overall, the long-term story still of 20% plus kind of growth over the next 4 to 5 years is what the AC industry has been looking out for. So, with that kind of a number, EPACK definitely believes that we will outgrow the market.

— Ajay DD Singhania
Hisense Partnership Cumulative Revenue Revenue · next 4 to 5 years · High confidence $1 billion

So the $1 billion revenue is a cumulative revenue over the next 4 to 5 years.

— Ajay DD Singhania

Market Growth

AC Industry Growth Market Growth · next 4 to 5 years · High confidence 20% plus

And overall, the long-term story still of 20% plus kind of growth over the next 4 to 5 years is what the AC industry has been looking out for.

— Ajay DD Singhania

Capex

Total Capex Capex · next 12 to 18 months · High confidence INR450 crores, plus/minus INR50 crores

our outlook for the current year or next 12 to 18 months is overall capex of INR450 crores, plus/minus INR50 crores. So that's the overall capex we are looking at INR450 crores to INR500 crores for next 12 months with INR50 crores already incurred in Q1.

— Ajay DD Singhania
Capex Incurred Capex · Q1 FY26 · High confidence INR50 crores

We incurred approximately INR50 crores of capex in Q1 FY '26

— Ajay DD Singhania

Capacity

Hisense Air Conditioner Capacity Capacity · Phase 1 · High confidence almost 0.5 million

for Hisense, we are putting up a capacity of almost 0.5 million air conditions in Phase 1

— Ajay DD Singhania
Hisense Capacity Utilization Capacity · within the next 3 years · Medium confidence optimal

increasing the utilization over the next 3 to 4 years and reaching an optimal capacity utilization within the next 3 years.

— Ajay DD Singhania
Washing Machine Capacity Capacity · by end of this year · High confidence almost 90 to 100 SKU per month

by end of this year, we are looking at setting up a capacity of almost 90 to 100 SKU per month

— Ajay DD Singhania
Washing Machine Capacity Capacity · next calendar year · High confidence almost 1 million

for the next calendar year, we can foresee a capacity of an available capacity of almost 1 million washing machines.

— Ajay DD Singhania
Air Fryer Capacity Capacity · Phase 1 · High confidence almost 1 million

the kind of capacities we have set up for this product is almost 1 million air fryers is the capacity we have set up in Phase 1.

— Ajay DD Singhania

Revenue Mix

AC Contribution to Revenue Revenue Mix · FY26 · Medium confidence 60%, 65%

we foresee AC contributing close to 60%, 65% kind of revenue.

— Ajay DD Singhania
SDA Contribution to Revenue Revenue Mix · FY26 · Medium confidence 10% to 15%

Small domestic appliances contributing 10% to 15% kind of revenue

— Ajay DD Singhania
Components Contribution to Revenue Revenue Mix · FY26 · Medium confidence 20%, 25%

and components, a healthy 20%, 25% kind of revenue.

— Ajay DD Singhania
LDA Contribution to Revenue Revenue Mix · FY26 · Medium confidence max of 10%

With large domestic appliances scaling up would be a max of 10%

— Ajay DD Singhania

Risks & concerns

Unseasonal Rains and Inventory Overhang
medium

Q1 FY26 was subdued due to unseasonal rains and surplus finished goods inventory from Q4 FY25, impacting secondary sales for ACs.

Management acknowledged
Customs Issue on Copper Tube Imports
medium

An industry-wide issue linked to imports of copper tube from ASEAN countries, currently unresolved, with bank guarantees being given.

Both acknowledged
Suboptimal Capacity Utilization at Sri City Plant
medium

The Sri City facility faced challenges with optimum capacity utilization, though it is now scaling up with component business and AC manufacturing.

Both acknowledged

Areas of evasion (1)

Exact split between RAC and non-RAC part in components revenue

Q&A highlights

3 direct

RAC Industry Inventory and Market Degrowth Direct

the industry growth was challenging in Q1, especially April and May, there was substantial loss of sales and revenue for all the brands. The channel inventory was at its peak beginning of June. However, June witnessed the channel inventories being liquidated largely. And now we see a situation wherein the inventories are normalizing.

Directly addresses the Q1 underperformance in the core RAC segment and provides an outlook on inventory correction.

Asked by Aniruddha Joshi

RAC Segment Recovery and Overall FY26 Growth Outlook Direct

the market is definitely expected to outgrow FY '25 overall despite the slowdown in Q1. So Q1, there was a degrowth, but overall, the annualized numbers for the market still seem to be positive and the market might see a growth of anywhere between, let's say, 10% to 15% kind of growth is what is expected still from the market.

Provides management's view on the recovery trajectory for the crucial RAC segment and the overall growth expectation for the full year.

Asked by Raj Sarraf

Hisense Capacity, Washing Machine Targets, and New Segment Contributions Direct

for Hisense, we are putting up a capacity of almost 0.5 million air conditions in Phase 1... by end of this year, we are looking at setting up a capacity of almost 90 to 100 SKU per month, so that's on the capacity side. So for the next calendar year, we can foresee a capacity of an available capacity of almost 1 million washing machines.

Details the progress and specific capacity targets for key diversification initiatives, which are crucial for future revenue streams.

Asked by Siddhant Kanodia

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Epack Durable reported a resilient Q1 FY26, with revenue from operations growing 14% year-on-year to INR662 crores. Despite this top-line growth, net profit declined by 2% to INR23 crores. However, the company's EBITDA increased by 6% to INR55 crores, and the EBITDA margin expanded by a significant 156 basis points to 8.24%, reflecting an optimized product mix and disciplined execution. Net profit margin also expanded by 43 basis points to 3.46%.

Diversification Strategy & Segmental Growth

The company's strategy to diversify beyond Room Air Conditioners (RAC) into higher-growth categories showed strong results. While the RAC business experienced a 34% decline year-on-year due to unseasonal rains and inventory overhang, other segments demonstrated robust momentum. The Small Domestic Appliances (SDA) segment grew by 16% YoY, and the Large Domestic Appliances (LDA) segment saw a 29% YoY growth. The product business collectively contributed 77% of the total operating revenue during the quarter.

New Ventures & Capacity Expansion

Epack Durable is actively expanding its manufacturing capabilities and entering new product lines. The joint venture facility, EPAVO, for BLDC motors at Bhiwadi is nearing completion with trial production started, aiming for 3 million motors capacity. For Hisense, a dedicated facility for OEM products is being set up in Sri City with a Phase 1 capacity of 0.5 million ACs, with mass production expected from Q4 FY26. The company has also started mass production of top-load fully-automatic washing machines, targeting a capacity of 1 million units by the next calendar year, and has set up capacity for 1 million air fryers in Phase 1.

RAC Market Dynamics & Outlook

The RAC market faced a challenging Q1 FY26, with an estimated degrowth of 30-35% in April and May due to unseasonal weather and high channel inventory. However, management noted that inventories largely liquidated in June and are now normalizing. The company expects the overall AC market to grow 10-15% in FY26 and over 20% annually in the long term (4-5 years), driven by evolving BEE standards and new product lineups. Production for the next season is expected to ramp up from Q3 onwards.

Components Business & Energy Meters

The Components segment delivered a growth of 5-6% year-on-year, supported by a solid order pipeline for PCBs, copper parts, and plastic molded components. A significant strategic move was the entry into the energy meter sector by supplying critical components, diversifying beyond consumer durables to reduce concentration risk and tap into adjacent high-growth industries. This segment is expected to grow multifold over the next 3-4 years, contributing to a more uniform revenue stream.

Financial Outlook & Margin Targets

Epack Durable is targeting an EBITDA margin of 7.5% plus for FY26, with a medium-term ambition of achieving close to 8%. This margin expansion is expected to be driven by a favorable product mix, with AC contributing 60-65% of revenue, SDA 10-15%, Components 20-25%, and LDA up to 10%. The company incurred approximately INR50 crores in capex in Q1 FY26 and plans an overall capex of INR450 crores +/- INR50 crores over the next 12-18 months to support its diversified growth roadmap. The company is eligible for PLI of INR56.25 crores in FY26, with INR14-15 crores booked in Q1.

This is an AI-generated summary of a publicly available earnings call transcript.

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