EPACK Durable Limited
Company Overview:
EPACK Durable Limited is India’s second largest room air conditioner original design manufacturer (ODM) in terms of number of units (indoor units + outdoor units) manufactured in FY23 through the ODM route. Since 2003, the company evolved from a RAC brand OEM to an ODM partner, focusing on product development and innovation. The company also started manufacturing of various value addition used in RAC such as sheet metal, injection moulding, cross flow fans and PCBA components. The company expanded its operations in the small domestic appliances market by manufacturing induction cooktops, mixer-grinders, and water dispensers alongside RACs.
Key Highlights:
1. Product portfolio:
a) Room air conditioners: The company designs and manufactures window air conditioners, indoor units and outdoor units. They also manufacture split air conditioners with specifications ranging from 0.75 ton to 2 ton across a range of energy ratings and types of refrigerants including split inverter air conditioners.
b) Small domestic appliances: The company currently designs and manufactures induction cooktops, mixer-grinders and water dispensers.
c) Components: The company manufacture heat exchangers, cross flow fans, axial fans, sheet metal press parts, injection moulded components, copper fabricated products, PCBAs, universal motors and induction coils for captive consumption as well as part of the product offerings to the customers.
2. Manufacturing Facility: The company has achieved the highest level of backward integration for RACs in India, all within a single location and grown organically. Its manufacturing facilities in Dehradun, Uttarakhand and Bhiwadi, Rajasthan which can annually produce 0.9 mn IDUs, 0.7 mn ODUs, 0.4 mn ODU Kits and 0.4 mn WACs. Additionally, the company can manufacture 0.1 mn water dispensers, 1.2 mn induction cooktops and 0.30 mn mixer grinders along with their components. Sri City Manufacturing Facility has an annual manufacturing capacity of 0.7 mn IDUs and 0.7 mn ODUs and can produce 0.7 mn induction cooktops along with their components.
3. Long-standing relationships with established customers: The company has established long-standing relationships with many Indian and global customers. RAC products are used by Blue Star, Daikin Airconditioning, Carrier Midea, Voltas, Havells, Haier Appliances, Infiniti Retail and Godrej and Boyce. On average, the company has worked with them for 8.7 years. SDA products are used by Bajaj Electricals, BSH Household Appliances and Usha International with an average relationship length of 6.3 years. The company’s growth and market share is due to the strong client relationships which will continue to leverage for future growth.
Valuation: The company is valued at FY23 PE and EV/EBITDA multiple of 65.7x and 25.6x respectively, at the upper price band on post-issue capital. EPACK is expanding and setting up new manufacturing facilities in Bhiwadi, Rajasthan and Sri City, Andhra Pradesh which will further augment the capacity. The company is likely to grow on back of strong growth in Indian RAC Market which is expected to grow at a CAGR of 15.7% during FY23-FY28 period. However, looking at the steep valuation at which business is offered to investors, it is advisable to AVOID the issue.
Click here to download EPACK Durable Limited IPO Note by SBI Securities
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