Concall AI

EPACK Durable Limited — Q3 FY25 earnings call

Call held 3 Feb 2025

Management summary

Epack Durable delivered strong revenue growth in Q3 and 9M FY25, driven by industrial tailwinds and new customer additions. While EBITDA growth was modest in Q3 due to underutilization costs at the new Sri City plant, management expects significant improvements as the plant ramps up to 50% utilization by year-end. The company is actively diversifying its product portfolio with new launches in washing machines and small appliances, aiming to reduce reliance on the RAC segment and enhance overall margins and asset turnover.

Highlights

Q3 FY25 Revenue from operations stood at INR 377 crores, up 35% YoY.
Q3 FY25 EBITDA was INR 24 crores, increasing by 1.3% YoY, with an EBITDA margin of 6.37%.
Q3 FY25 Net Profit was approximately INR 2.5 crores.
9M FY25 Revenue from operations reached INR 1,528 crores, up 71% YoY.
9M FY25 EBITDA was INR 86 crores, up 41% YoY, with an EBITDA margin of 5.60%.
9M FY25 Net Profit increased by 132% YoY to INR 17 crores, with a PAT margin of 1.14%.
Room AC segment contributed 66% of Q3 revenue, growing 37% YoY, while overall dependence on RAC reduced.
Sri City facility utilization is currently 15%-20% but targeted to reach 50% by end of calendar year 2025.

Key financials

2 periods

Q3 FY25

Revenue
₹377 Cr
YoY +35%
EBITDA
₹24 Cr
YoY +1.3%
EBITDA Margin
6.4%
Net Profit
₹2.5 Cr

9M FY25

Revenue
₹1,528 Cr
YoY +71%
EBITDA
₹86 Cr
YoY +41%
EBITDA Margin
5.6%
Net Profit
₹17 Cr
YoY +132%
PAT Margin
1.1%

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

Product Business
98% Revenue Contribution (Q3 FY25)
Room AC Segment
66% Revenue Contribution (Q3 FY25)37% YoY Growth (Q3 FY25)₹1,240 Cr Revenue (9M FY25)
Component Business
6% Revenue Contribution (9M FY25)14% Revenue Contribution (Q3 FY25)
Exports
4% AC Revenue Contribution (Current FY)

Guidance & targets

Profitability

EBITDA Margin Profitability · FY25 · Medium confidence 7.25%-7.5%

for this current fiscal year, we believe that our EBITDA margins would be around 7.25%-7.5% range which we have been also guiding previously to the market.

— Ajay DD Singhania, Managing Director and CEO
PAT Margin Profitability · coming quarters · Medium confidence Improvement

we will definitely see a better improvement in the PAT and overall margins as well.

— Ajay DD Singhania, Managing Director and CEO
ROE/ROCE Profitability · FY27-28 onwards (next 2-3 years) · High confidence 15%-16%

In terms of ROE/ROCE, we are looking at anywhere around 15%-16% in next 2-3 years, so FY27-28 onwards, we definitely will be able to improve the ROE to 15% plus level.

— Ajay DD Singhania, Managing Director and CEO
EBITDA Margin Profitability · coming 2-3 years · Medium confidence beyond 7.5%

we definitely look to improve it beyond 7.5% in coming 2-3 years.

— Ajay DD Singhania, Managing Director and CEO

Capacity

Sri City Capacity Utilization Capacity · by end of calendar year 2025 · High confidence 50%

From 15%-20% today

By end of this calendar year, we will definitely see the Sri City facility, reaching its normalized capacity utilization to around 50% from current 15%-20% utilization.

— Ajay DD Singhania, Managing Director and CEO
Washing Machine Capacity Capacity · FY26 · High confidence 100,000 per month (1 million annualized)

we are looking to ramp up our capacity in a phased manner to 100,000 per month on an annualized capacity of 1 million in the first calendar year of the financial year, 25-26 for the washing machines.

— Ajay DD Singhania, Managing Director and CEO
RAC Capacity Utilization Capacity · near short term and medium term (3-4 years) · High confidence 60%-65%

From 50%-55% today

we definitely are working to improve our RAC utilization from 50%-55% to at least 60%-65% in near short term and medium term, let us say, 3-4 years as the market is maturing.

— Ajay DD Singhania, Managing Director and CEO

New Product Launch

Hisense AC Production Start New Product Launch · Q3 next financial year · High confidence Q3 FY26 (Aug-Sep)

we are targeting to start Hisense production of room ACs around Q3 of the next financial year that is in August-September is what we are targeting to start production for the Hisense product.

— Ajay DD Singhania, Managing Director and CEO
Washing Machine Mass Production Start New Product Launch · Q1 next financial year · High confidence Q1 FY26

Q1 of next financial year should be the period from where our real mass production to start for washing machine.

— Ajay DD Singhania, Managing Director and CEO
Air Fryers Production Start New Product Launch · end of next month · High confidence mid-March 2025

towards mid of March, we should be starting our production for air fryers

— Ajay DD Singhania, Managing Director and CEO

Volume

Cooler Production Volume · for the season · High confidence 60,000-70,000 per month (2.5 lakh annualized)

we are looking to produce anywhere between 60,000 to 70,000 coolers per month and an annualized number 2.5 lakh is what we are looking at in terms of cooler especially.

— Ajay DD Singhania, Managing Director and CEO

Working Capital

Working Capital Requirement Working Capital · Q4 FY25 · High confidence INR 350-360 crores

we will be maintaining this requirement around INR 350 - INR 360 crores.

— Rajesh Mittal, CFO

Revenue

EPAVO Motors Revenue Revenue · FY26 · High confidence Rs. 150 crores

we are targeting to achieve revenue of almost Rs. 150 crores at the new facility for financial year 25-26.

— Ajay DD Singhania, Managing Director and CEO
Overall Revenue Revenue · FY25 · High confidence INR 2,150 crores plus

Our previous guidance to the market was that we are looking at the overall revenue of INR 2,150 crores for the 12 months. That has been our guidance previously also. So, we would like to maintain the same guidance that we are looking to close the year at INR 2,150 crores plus.

— Ajay DD Singhania, Managing Director and CEO

PLI

PLI Receivable (Previous FY) PLI · before end of March (FY25) · High confidence INR 30 crores

our last receivable of approx INR 30 crores is expected to be received before end of March.

— Ajay DD Singhania, Managing Director and CEO
PLI Accrued (9M FY25) PLI · 9M FY25 · High confidence INR 28 crores (out of INR 37 crores allowed)

this year, we are allowed PLI of INR 37.5 crores of which close to INR 28 crores has been accrued in the last 9 months.

— Ajay DD Singhania, Managing Director and CEO

Product Mix

RAC Revenue Contribution Product Mix · next 2-3 years · High confidence 60%-65%

From 80% today

our overall dependence on AC on an annualized basis will come down from 80% to somewhere around 60%-65% in next 2-3 years

— Ajay DD Singhania, Managing Director and CEO
Component Revenue Contribution Product Mix · medium term (next 2-3 years) · High confidence 12%-15%

From 4% (last year), 6% (current 9M) today

the component definitely from 4% in the last year currently at almost 6% and then up to 12%-15% is definitely one number we are looking at in the medium term in next 2-3 years.

— Ajay DD Singhania, Managing Director and CEO

Efficiency

Asset Turnover Ratio Efficiency · next 2-3 years · High confidence 3.5-4x

From 2.5-3x today

we are working to achieve an asset turn of 3.5-4x kind of figure which is what we are trying to achieve in next 2-3 years.

— Ajay DD Singhania, Managing Director and CEO

Risks & concerns

Supply Chain Disruptions (Copper)
medium

Q3 FY25 saw disruptions in critical raw material copper due to lack of local supply and BIS approval issues for Chinese manufacturers, though normalization is expected with recent BIS approvals for foreign suppliers.

Management acknowledged
Future Compressor Supply Chain Issues
medium

Potential disruptions from June onwards if some compressor suppliers lose BIS certificates, though domestic capacity is expected to increase within 12-18 months to meet demand.

Management acknowledged
Sri City Plant Underutilization
medium

The new Sri City facility is currently operating at 15%-20% utilization, leading to higher costs and impacting EBITDA growth, but is expected to reach 50% utilization by end of calendar year 2025 as client approvals are secured.

Management acknowledged

Q&A highlights

3 direct

Sri City Plant Normalization and Product Roadmap Direct

By end of this calendar year, we will definitely see the Sri City facility, reaching its normalized capacity utilization to around 50% from current 15%-20% utilization... by September, we foresee that we should start the OEM production of air-condition... washing machine will be rolled out earlier, around Q2 of the next financial year.

Addresses the drag on margins from the new plant and provides specific timelines for new product launches, crucial for future growth and margin improvement.

Asked by Aniruddha Joshi

Compressor Supply Chain and Backward Integration Plans Direct

we definitely understand the current concerns around the supply chain and especially compressor availability in the long term... within next 12-18 months, sufficient capacity will be developed within the country to meet the domestic requirement... in terms of EPACK getting into manufacturing of compressors for AC... there is no plan currently for us and within next 3-4 years, definitely not what we are looking at.

Clarifies the company's strategy regarding critical raw material supply (compressors) and confirms no immediate plans for backward integration into compressor manufacturing, which is a key component.

Asked by Kaushal Sharma

Reasons for Lower Sri City Capacity Utilization Direct

Sri City is a facility we started in Jan of 24. It is a 12-month-old facility and already we have brought up the utilization to almost 17%-18% on an annualized basis. And a lot of larger customers, brands take a lot of time to validate the facility and approve... now I mean as we have entered the current high season time, it is already approved by most of the key customers.

Explains the reason for lower-than-expected utilization at the new Sri City plant (client validation delays) and indicates that this issue is being resolved, which is critical for future margin improvement.

Asked by Deepali

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Detailed narrative

Q3 FY25 Performance Overview

Epack Durable reported a strong Q3 FY25 with revenue from operations at INR 377 crores, marking a 35% year-on-year increase. EBITDA stood at INR 24 crores, growing by 1.3% YoY, with an EBITDA margin of 6.37%. Net profit for the quarter was approximately INR 2.5 crores. For the nine months ended December 31, 2024, revenue reached INR 1,528 crores (up 71% YoY), EBITDA was INR 86 crores (up 41% YoY) with a 5.60% margin, and net profit surged 132% YoY to INR 17 crores, achieving a PAT margin of 1.14%.

Sri City Plant Ramp-up and Margin Impact

The new Sri City facility, operational since January 2024, is currently utilized at 15%-20% of its capacity, which has contributed to lower EBITDA growth on a year-on-year basis due to higher associated costs. Management expects the plant to reach a normalized capacity utilization of around 50% by the end of calendar year 2025. Client validation and approval processes for the new facility caused initial delays, but these are now largely resolved, and utilization is expected to improve significantly in Q4 FY25 and subsequent quarters.

Product Diversification and New Launches

The company's diversification strategy is gaining traction, with product business contributing 98% of total revenue in Q3 FY25. While Room AC remains a core segment, contributing 66% of revenue (up 37% YoY), the overall dependence on RAC has reduced. Epack Durable is targeting to start Hisense AC production at its new Sri City subsidiary around Q3 FY26 (August-September 2025). Mass production for washing machines is slated for Q1 FY26, with a ramp-up to 100,000 units per month (1 million annualized) in FY26. Production of air fryers is expected to commence by mid-March 2025, further expanding the small appliance portfolio.

Supply Chain and Raw Material Outlook

The company faced supply chain disruptions in Q3 FY25, particularly concerning copper availability due to issues with BIS approvals for Chinese manufacturers. While this has impacted the industry, BIS approvals for some foreign suppliers are now granted, which is expected to normalize copper supply in the short term. Regarding compressors, management anticipates sufficient domestic capacity development within the next 12-18 months, with no plans for Epack Durable to manufacture compressors in the next 3-4 years.

Financial Outlook and Capital Allocation

Epack Durable maintains its FY25 revenue guidance of INR 2,150 crores plus, with an EBITDA margin target of 7.25%-7.5%. The company aims to improve its ROE/ROCE to 15%-16% by FY27-28 onwards, driven by better capacity utilization and product mix. Working capital requirements are projected to be around INR 350-360 crores for Q4 FY25, with no fresh debt required for capex. The gross block currently stands at INR 850 crores, and the asset turnover ratio is expected to improve from 2.5-2.75 to 3.5-4x in the next 2-3 years.

Component Business and Exports Growth

The component business is a growing segment, contributing almost 6% to total revenue in 9M FY25 and 14% in Q3 FY25. The company targets INR 190-200 crores in component revenue for the current financial year and expects its contribution to rise to 12%-15% in the medium term (next 2-3 years). Exports have also seen significant growth, now accounting for 4% of total AC revenue in 9M FY25, up from 1%-2% previously, with expectations for continued strong growth in the next 3-4 years due to cost leadership.

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

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