Concall AI

EPACK Durable Limited — Q3 FY26 earnings call

Call held 21 Jan 2026

Management summary

Epack Durable delivered a healthy Q3 FY26, with revenue growing 13.5% YoY to ₹427.8 crores and EBITDA up 31.5% to ₹31.7 crores, driven by robust growth in SDA, LDA, and Components segments. While the core AC business saw a marginal decline, the company's diversification strategy is proving effective, expanding its customer base and product portfolio. Despite challenges like commodity inflation and higher depreciation leading to a slight net profit margin contraction, management remains confident in its long-term growth trajectory and operational discipline.

Highlights

Revenue from operations increased by 13.5% YoY to ₹427.8 crores, demonstrating healthy performance despite external headwinds.
EBITDA grew significantly by 31.5% YoY to ₹31.7 crores, with EBITDA margin expanding to 7.41% from 6.39% in the prior year.
Strong growth in diversification segments: SDA grew 30% YoY, Components 61% YoY, and LDA 74% YoY, indicating successful strategy execution.
The company added two new customers during the quarter, increasing its total customer base to 67, and its washing machine business is ramping up well.
Product business (SDA, LDA, Components) contributed 75% of total operating revenue, reaffirming customer confidence and market adoption.

Concerns

Net profit margin contracted by 5 basis points to 0.61% due to higher depreciation and finance costs.
The AC business segment experienced a marginal 1% year-on-year decline during the quarter.
Channel inventory is currently a little high, though expected to normalize post Q4 FY26.
New BEE norms and commodity inflation are necessitating an 8-10% price hike, which could impact demand.

Key financials

01 Revenue from Operations ₹427.8 Cr +13.5%YoY
02 EBITDA ₹31.7 Cr +31.5%YoY
03 EBITDA Margin 7.4%
04 Net Profit ₹2.6 Cr +4%YoY
05 Net Profit Margin 61%

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

Small Domestic Appliances (SDA)
0.3 decimal_fraction YoY Growth
Components
0.61 decimal_fraction YoY Growth
Large Domestic Appliances (LDA)
0.74 decimal_fraction YoY Growth
AC Business Segment
-0.01 decimal_fraction YoY Growth

Capital allocation

high confidence

Capex ₹45 Cr this quarter · ₹450 Cr (next 12-18 months) planned
- Capacity expansion and equipment installation for washing machine lines
- Component segment at new Sricity plant
We have incurred INR44 crores of capex in Q3 FY '26, primarily directed towards capacity expansion and equipment installation for washing machine lines, component segment at our new Sricity plant. ... In our opening for this financial year, we have given a guidance that the company is looking at an investment of around INR450 crores over next 12 to 18 months. In line with that, the company has already incurred a capex of almost INR220 crores in last nine months. So in quarter 1, we had an investment of around INR45 crores. in quarter 2, INR130 crores and quarter 3, the last quarter, another INR45 crores.
Debt Debt disclosed

Our interest cost in this quarter has come down from an earlier INR20 crores to now INR13 crores. Could you help me understand how were we able to bring this down? ... I think there is some error. The cost is similar to the last quarter. So definitely, we are consistently improving our inventory level and working capital, and we are geared up to reduce the interest cost, but it is the same as last quarter.
M&A Hisense JV facility Joint venture · Pending regulatory

Commence production in coming quarters for RAC, front-load washing machines, and TVs

Additionally, investments made at our JV facility with Hisense and our new greenfield plant in Bhiwadi are expected to commence production in coming quarters. ... The newly formed JV facility, which was under construction has now completed the construction and trial production is on track and have progressed very well. With all key milestones achieved, the facility is now ready to commence production in the current quarter, which is Q4 FY '26. The plant will initially manufacture RACs for domestic market and will gradually expand to export market... Going forward, the plan is also to manufacture the fully automatic front-load washing machines and then TVs also, which will start -- we start ramping up and introducing every quarter.
M&A Epavo (motors subsidiary) Other · Integrated

Strategic investment for backward integration, support BLDC demand, enhance resilience
Looking to reduce losses year-on-year in Q4 FY26 and turn profitable in FY27.

So Aryan, Epavo for us is strategic investment. So it is not only a backward integration, it also helps us position, support the growing demand for energy-efficient since the BEE is upgraded every year BLDC application is increasing every year. ... So the new greenfield facility in Bhiwadi commenced production -- trial production in end of Q2. Q3, we have seen the ramp-up happening. ... Q4 onwards, we are looking at reducing first the loss year-on-year. And definitely, FY '27, we will see this company trending into green from red.

Guidance & targets

Revenue Mix

AC contribution to total revenue Revenue Mix · medium term (FY28-29) · High confidence ~55%

From 57-60% today

And it will further reduce to around 55% in the medium term, let's say, till FY '28, '29 kind of.

— Ajay DD Singhania
SDA/LDA contribution to total revenue Revenue Mix · medium term · High confidence ~25%

So that's the overall guidance that AC contributing 55% of the overall revenue and our SDA/LDA growing to 25% and component another 20%, 25%.

— Ajay DD Singhania
Components contribution to total revenue Revenue Mix · medium term · High confidence ~20-25%

— Ajay DD Singhania

Profitability

EBITDA Margin Profitability · medium to longer-term horizon · High confidence 7.5% to 8%

But overall, the company is confident that we will maintain margin EBITDA margin of 7.5% to 8% in medium- to longer-term horizon.

— Ajay DD Singhania

AC Industry Growth

AC numbers growth AC Industry Growth · current calendar year FY26 · High confidence 15% to 20%

So we are discussing that the growth of AC market is currently seems to be around 15% to 20% kind of growth in AC numbers for the industry for current calendar year FY '26 is the ongoing discussion, yes.

— Ajay DD Singhania
AC numbers growth AC Industry Growth · next 4-5 years · High confidence 15% to 20%

The growth in AC is expected to be around 15% to 20% for the coming four to five years.

— Ajay DD Singhania

Company AC Growth

AC growth rate Company AC Growth · next 4 years till 2030 · High confidence 25% to 30%

And the company is poised strongly to grow at a much faster rate, at least like 25% to 30% growth in AC in next four till 2030 is the kind of outlook we have.

— Ajay DD Singhania

Overall Revenue

FY26 Revenue Growth Overall Revenue · FY26 · Medium confidence Flattish or marginal growth

And at best, currently, we are estimating a flattish kind of revenue for the current financial year FY '25 '26 marginal growth.

— Ajay DD Singhania

New Product Launches

New products launched New Product Launches · Q4 FY26 · High confidence Vacuum cleaners and tower fans

So in the current quarter, quarter 4, we are looking to launch at least two new products, vacuum cleaners and tower fans.

— Ajay DD Singhania

Market Potential - Air Fryers

Air fryer units sold Market Potential - Air Fryers · next coming years · Medium confidence 1 million units

As you have mentioned that air fryers, we might sell 1 million units for INR200 crores in the next coming years.

— Deepali Bansal (analyst question)

Market Potential - Small Appliances

Market potential for infrared vacuum cleaners, coffee makers, Nutri blenders Market Potential - Small Appliances · Medium confidence ₹800-1,000 crores each

Each of these smaller appliances like the air fryers, infrared, coffee maker, Nutri blender, these each are in 3-digit categories. So they are INR800 crores to INR1,000 crores categories each in terms of market potential.

— Ajay DD Singhania

Small Appliances Revenue

Revenue from new small appliance categories Small Appliances Revenue · medium horizon (3-5 years) · Medium confidence ₹150-200 crores each

So that is we believe that each of these categories could ramp up to be 150 to 200 categories in a medium horizon three to five years.

— Ajay DD Singhania

Customer Concentration

Dependence on top 2-3 customers Customer Concentration · medium to long term · High confidence ~30%

From 35-40% today

So -- but anyway, in the medium to long term, we see that our overall dependence on top 2 to 3 customers should be maintained anywhere around 30-odd percent.

— Ajay DD Singhania

Epavo Profitability

Epavo (motors subsidiary) profitability Epavo Profitability · FY27 · High confidence Profitable

From Loss-making today

And definitely, FY '27, we will see this company trending into green from red.

— Ajay DD Singhania
Epavo (motors subsidiary) losses Epavo Profitability · Q4 FY26 · High confidence Reduced year-on-year

Q4 onwards, we are looking at reducing first the loss year-on-year.

— Ajay DD Singhania

What to watch in Q4 FY26

Epavo (motors subsidiary) profitability

Q4 FY26 / FY27

Current Loss-making

Target Reduced losses in Q4 FY26, profitable in FY27

Why it matters

Epavo is a strategic backward integration; its path to profitability is crucial for overall margin improvement and business resilience.

Q4 onwards, we are looking at reducing first the loss year-on-year. And definitely, FY '27, we will see this company trending into green from red.

Risks & concerns

Commodity Price Inflation
medium

Commodity price increases, along with new BEE norms, are necessitating an 8-10% price hike, which remains a concern for market demand, although EPACK passes through costs.

Management acknowledged
High Channel Inventory
medium

Channel inventory is currently a little high, but management expects it to normalize post Q4 FY26, supporting healthier demand and production planning.

Management acknowledged
AC Market Degrowth
medium

The AC business segment experienced a marginal 1% YoY decline in Q3, and the industry overall is expected to see 10-15% degrowth in FY26, though Q3 showed reduced degrowth.

Management acknowledged
Seasonal Demand Volatility
low

While AC is a seasonal industry, management notes that the overall seasonality effect has reduced, with AC demand becoming more uniform across quarters, thereby reducing seasonal risks.

Management downplayed

Q&A highlights

8 direct

Initiatives for SDA/LDA growth and role of backward integration/design Direct

So regarding our specific initiatives, especially to grow the small domestic appliances and large domestic appliances, as shared earlier, we are diversifying both by increasing the product offerings as well as diversifying into acquiring of new customers. So especially in small domestic appliances, we have increased our product portfolio by introducing two new products in the current quarter and the last quarter, air fryer and nutri blenders. Going forward, we have plans to further expand our product portfolio and introduce newer products like coffee makers, tower fans, air purifiers, etc.

Clarifies the company's multi-pronged strategy for accelerating growth in high-potential segments and leveraging backward integration for competitiveness.

Asked by Sucrit D Patil

Balancing cost efficiency with capital for SDA/LDA growth and working capital optimization Direct

So while evaluating any product, whether it is SDA or LDA or any line, we deploy the capital allocation very diligently. We monitor the cost on product-wise and return on each and every product. Before launching any product, our internal team and R&D team develop the product. Once the product is validated and approved by the customer and desired IRR and return on investment is being calculated, that's when we make the investments.

Details the disciplined approach to capital allocation and product development, ensuring profitability while pursuing growth in new categories.

Asked by Sucrit D Patil

AC industry outlook, Q3 growth, impact of new BEE tables and commodity prices on pricing Direct

So the channel inventory, yes, is definitely a little high, but it is expected to normalize post Q4 FY '26, supporting healthier demand and production planning going forward. And especially with the new BEE products, there is definitely a cost escalation on account of the newly designed product as well as commodity impact of Q3 getting passed on to Q4 could be minimum. So both BEE as well as the commodity impact currently seems around 8% to 10%, especially for the production, ongoing production in Q4 currently.

Provides critical insights into the current state of the AC market, the impact of regulatory changes and raw material costs on pricing, and the outlook for inventory levels.

Asked by Aniruddha Joshi

Primary sales vs secondary sales, inventory liquidation, and growth outlook for EPACK Direct

So Praveen, at 25% to 30% degrowth was in primary sales, whereas the secondary sales was still at 10% to 12% over the last nine months, which means that the inventory buildup which has happened in previous year was kind of sold out. ... So currently, in line with our discussion with most of the large brand customers, most of the brands have planned 15% to 20% kind of growth over FY '24, '25 numbers. And the current RFQs and order book is in line with such escalated demand.

Clarifies the inventory situation in the channel and confirms strong demand outlook from brand customers for the upcoming period, indicating potential for EPACK's manufacturing.

Asked by Praveen Sahay

Component segment growth drivers (beyond AC) and margin profile across segments Direct

So for us, component business as a whole, all the three categories, the copper parts, plastic and PCB are rapidly growing. For plastic, especially, we are doing a lot of components like cross-flow fans wherein we have approvals from almost all the marquee clients. So plastic parts, PCBs, copper, all three -- the entire component segment is what we see growing at a much faster rate. And not just components for AC, these are also for other diversified appliances. ... So considering our overall gross margins, net of BOM costs at around 14% to 15% level, which is largely indicative of the gross margins in air conditions. For small domestic appliances and large domestic appliances, the gross margins are comparatively better at around 16% to 17% and similar is the case with the components.

Highlights the broad-based growth in the components segment beyond AC and provides a clear understanding of the gross margin differences across various product categories.

Asked by Praveen Sahay

Old rated AC stock in the industry, brand strategy for new rated units, and summer outlook Direct

As a manufacturer, we are not allowed to carry any inventory of the old rated product. So we have zero inventory of the old rated product. This inventory for the liquidated over Q4. However, it is allowed to be sold until June of FY '26. The new rated production -- the production for the new rated product for everybody, this is gradually ramping up. Going forward, the entire production has to be done with the new rated product only. ... So for the current calendar year, Jan to June, if I talked about last -- like I've been repeating, the industry is preparing itself for a growth of almost 15% to 20% on calendar year '26 numbers.

Addresses concerns about inventory overhang of old BEE-rated ACs and confirms the industry's positive growth outlook for the upcoming summer season with new products.

Asked by Anupam

Washing machine strategy, especially for front-load, given minimal outsourcing in the industry Direct

So Tanay, in terms of washing machine, we had started our top load, fully automatic washing machine almost two quarters ago, and now we see significant ramp-up happening with the acquisition of two key new multinational customers with whom the demand outlook is extremely good. ... So that gives us confidence, and this is what we see as a growth contributor, which will then drive our further growth in washing machine category. Semi-automatic or twin tub is more -- is a category just to fulfil the entire product catalogue -- the product offering. So for us, the focus remains largely on the fully automatic, both top load and front load, and we see significant ramp-up happening in the next three to four quarters.

Details the company's aggressive strategy in the washing machine segment, including new customer acquisitions and plans for front-load machines, positioning it for significant growth in a less outsourced category.

Asked by Tanay Shah

Epavo (motors subsidiary) profitability outlook Direct

So Aryan, Epavo for us is strategic investment. So it is not only a backward integration, it also helps us position, support the growing demand for energy-efficient since the BEE is upgraded every year BLDC application is increasing every year. ... Q4 onwards, we are looking at reducing first the loss year-on-year. And definitely, FY '27, we will see this company trending into green from red.

Provides clarity on the strategic importance and the expected timeline for profitability of the Epavo motors subsidiary, a key backward integration initiative.

Asked by Aryan Bhatia

3 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Epack Durable reported a robust Q3 FY26, with revenue from operations increasing by 13.5% year-on-year to ₹427.8 crores. EBITDA saw a significant rise of 31.5% YoY, reaching ₹31.7 crores, and the EBITDA margin expanded to 7.41% from 6.39% in the previous year. Despite these gains, net profit grew by a modest 4% to ₹2.6 crores, with the net profit margin contracting by 5 basis points to 0.61%, primarily due to higher depreciation and finance costs.

Successful Diversification and Segmental Growth

The company's strategic diversification into non-AC segments is yielding strong results. The Small Domestic Appliances (SDA) segment grew by 30% YoY, the Components segment by 61% YoY, and the Large Domestic Appliances (LDA) segment by an impressive 74% YoY. These 'product business' categories collectively contributed 75% of the total operating revenue in Q3, effectively offsetting a marginal 1% year-on-year decline in the core AC business segment. This balanced growth across product categories is enhancing business resilience and reducing concentration risk.

AC Market Dynamics and Pricing Outlook

The AC industry experienced a reduced degrowth of 10-12% in secondary sales over the last nine months, with Q3 showing signs of recovery. For calendar year 2026, the industry is preparing for a 15-20% growth in AC numbers. However, new BEE norms and commodity price increases are necessitating an 8-10% price hike, with 50% attributed to BEE upgrades and 50% to commodity impact. While channel inventory is currently high, it is expected to normalize post Q4 FY26, supporting healthier demand and production planning.

Capital Expenditure and Capacity Expansion

Epack Durable incurred ₹45 crores in capital expenditure during Q3 FY26, primarily directed towards capacity expansion for washing machine lines and the component segment at its new Sricity plant. The company has spent ₹218 crores in capex over the first nine months of FY26 and plans an additional ₹225 crores over the next 6-9 months, out of a total guidance of ₹450 crores for the next 12-18 months. These investments are crucial for supporting diversified growth and expanding manufacturing capabilities.

Strategic Investments and Joint Ventures Progress

The company's JV facility with Hisense has completed construction and trial production is on track, with commercial production expected to commence in Q4 FY26. This facility will initially manufacture RACs and later expand to front-load washing machines and TVs. The Epavo motors subsidiary, a strategic backward integration, began trial production in Q2 and saw ramp-up in Q3. Epavo is expected to reduce losses year-on-year in Q4 FY26 and achieve profitability in FY27, supporting the growing demand for energy-efficient BLDC applications.

Medium-Term Strategic Vision and Product Portfolio Expansion

Epack Durable aims to further diversify its revenue mix in the medium term (FY28-29), targeting a reduction in AC's contribution to ~55% while increasing SDA/LDA to ~25% and Components to ~20-25%. The company projects its AC business to grow by 25-30% until 2030. New product launches are planned for Q4 FY26, including vacuum cleaners and tower fans, as part of expanding the SDA portfolio. The market potential for new small appliances like air fryers, infrared vacuum cleaners, coffee makers, and Nutri blenders is estimated at ₹800-1,000 crores each, with individual categories potentially ramping up to ₹150-200 crores in 3-5 years.

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