Detailed Narrative
Q4 and Full Year FY26 Financial Performance
Epack Durable reported a challenging Q4 FY26 with revenue from operations declining by approximately 8% YoY to Rs. 591 crore. EBITDA for the quarter decreased significantly by 64.2% YoY to Rs. 25.8 crore, leading to an EBITDA margin of 4.37% compared to 11.21% in the prior year. For the full fiscal year 2026, revenue stood at Rs. 1,894 crore, a 12.7% YoY decline, with EBITDA at Rs. 113.9 crore, down 27.7% YoY, and a net profit of Rs. 3.3 crore.
Impact of PLI Reversal and RIPS Incentive
The company reversed Rs. 32.42 crore of previously recognized PLI income accrued during the first nine months of FY26, citing evolving assessment and anticipated shortfall in incremental revenue growth targets. The total eligible PLI for FY26 was Rs. 56.5 crore, which was not fully recognized. Partially offsetting this, Epack Durable recognized Rs. 21.78 crore under the Rajasthan Investment Promotion Scheme (RIPS) in Q4 FY26, including Rs. 4.96 crore for FY25-26 and Rs. 16.82 crore for earlier periods.
Segmental Performance and Diversification Strategy
While the RAC segment experienced a decline of approximately 25% YoY in Q4 FY26, the SDA and LDA segments demonstrated robust growth of approximately 53% YoY. The component business also performed strongly with about 50% YoY growth. This diversification strategy, along with backward integration into injection molded components, PCBs, and copper components, aims to strengthen long-term business fundamentals and reduce customer concentration risk.
Capacity Expansion and Hisense Partnership
Epack Durable incurred a CAPEX of approximately Rs. 79 crore in Q4 FY26, primarily for washing machine capacity expansion and component manufacturing. The new Greenfield facility at Bhiwadi is expected to contribute meaningfully in coming quarters. The Hisense partnership's manufacturing facility, operated by a wholly-owned subsidiary, became operational in Q4 FY26, with AC production starting in late March and front-load washing machine production expected by mid-Q2 FY27.
Inventory Management and Market Outlook
Elevated inventory levels of Rs. 837 crore at year-end were primarily due to strategic stocking of imported compressor components ahead of BIS expiry and anticipation of a strong summer season. Management indicated that inventory levels have largely normalized post-Q4, and the industry expects approximately 15% growth in Q1 FY27. The company aims to outgrow this industry growth, with a strong order book and a positive recovery path.
Capital Expenditure and Debt Profile
The company capitalized Rs. 300 crore in CAPEX by March FY26, part of a budgeted Rs. 470 crore over 18-24 months. An additional Rs. 170-200 crore is planned for the next 9-12 months for capacity expansion in Bhiwadi and Sri City and new product categories. The current debt level stands at approximately Rs. 700 crore, including a Rs. 200 crore term loan, with expectations for it to remain around this level in FY27.
Epavo Joint Venture Performance
The Epavo JV, with a total investment of approximately Rs. 100 crore, saw its losses double in FY26. However, a new Greenfield manufacturing facility for Epavo became operational in Q3 FY26, with mass production starting in January. Management is confident that FY27 will be a significant ramp-up year, with the company expected to turn profitable in FY27-28.