Epack Durable

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%.

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.

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.

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.

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.

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.