Epack Durable

Epack Durable reported a robust Q3 FY26, with revenue from operations increasing by 13.5% year-on-year to INR427.8 crores. EBITDA saw a significant jump of 31.5% year-on-year, reaching INR31.7 crores, and the EBITDA margin expanded to 7.41% from 6.39% in the prior year. Net profit grew 4% year-on-year to INR2.6 crores, although the net profit margin slightly contracted by 5 basis points to 0.61% due to higher depreciation and finance costs.

The company's diversification strategy is proving effective, with strong growth in non-AC segments offsetting a marginal 1% year-on-year decline in the core AC business. The Small Domestic Appliances (SDA) segment grew by 30% year-on-year, driven by new product introductions like air fryers and nutri blenders. The Components segment delivered a standout performance with 61% year-on-year growth, while the Large Domestic Appliances (LDA) segment, primarily washing machines, grew an impressive 74% year-on-year.

The AC industry experienced a significant degrowth of 25-30% in primary sales and 10-12% in secondary sales over the first nine months of FY26. However, demand is gradually improving, with production ramp-up for new BEE-rated products starting mid-January. The industry expects 15-20% growth in calendar year 2026. An 8-10% price hike is being implemented across the industry due to new BEE norms and commodity cost increases, with a second price increase deemed 'imminent' if commodity prices sustain their upward trend.

Epack Durable has incurred INR220 crores in capital expenditure over the last nine months, including INR44 crores in Q3 FY26, primarily for washing machine lines and component segments at its new Sricity plant. The company plans an additional INR225 crores in capex over the next 6-9 months, part of a larger INR450 crore investment over 12-18 months. The JV facility with Hisense and the new greenfield plant in Bhiwadi are on track to commence production in Q4 FY26, initially focusing on RACs and later expanding to front-load washing machines and TVs.

Management aims to further reduce dependence on the AC segment, targeting its contribution to total revenue to be around 55% by FY28-29, down from the current 57-60%. Concurrently, SDA/LDA is projected to contribute 25%, and Components 20-25% of total revenue in the medium term. The company is confident in maintaining an EBITDA margin of 7.5-8% in the medium- to longer-term horizon, driven by improved product mix and operational efficiencies.

Epack Durable is actively expanding its product portfolio, with plans to launch new SDA products like vacuum cleaners and tower fans in Q4 FY26, and coffee makers and air purifiers in future quarters. Each of these smaller appliance categories, such as air fryers, infrared vacuum cleaners, coffee makers, and nutri blenders, is estimated to have a market potential of INR800-1000 crores. The company aims to increase its wallet share in these categories from zero to 20-30% in the coming years.

The Epavo JV, a strategic investment for backward integration into BLDC applications, is expected to trend into profitability ('green from red') by FY27, having commenced trial production in Q2 FY26 and ramped up in Q3. The company has successfully reduced its dependence on its top 2-3 customers from nearly 70% to 35-40% in Q3 FY26, and aims to maintain this concentration around 30% in the medium to long term, while also increasing wallet share with existing marquee clients through cross-selling diverse products.