Key Points
We hosted Mr. Narayan Lodha, group CFO of Epack Durable, who highlighted that Q2 performance was impacted by a sharp slowdown in the RAC segment, driven by inventory delays and an extended period of nearly one and a half months of zero sales following the GST announcement. Despite this temporary setback, the management remains optimistic and expects full-year growth of around mid-teens while maintaining a medium term growth trajectory of 18–20% CAGR over the next three to five years.
Components: Management highlighted the company manufactures PCBs, plastic parts, and sheet metal in-house, while compressors—about 20% of the cost—are outsourced. Components remain a key investment focus, ensuring year-round utilization, with plans to scale capacity to 4mn units and extend applications to smart meters, small appliances, and auto parts.
Washing machines: The management said the company currently produces 7–11kg top-load fully automatic models and sees strong growth potential in this large market. The focus ahead is on launching higher-capacity (11–15kg) top-load and front-load machines, leveraging the technology partnership with Hisense.
Small domestic appliances: The management indicated a focus on products such as vacuum cleaners and coffee makers, which typically see a seasonal slowdown in Q3, followed by stronger demand in Q4. They also highlighted plans to enter high-margin categories like sound boxes and premium speakers, where margins can be around 40%-50%.
We maintain our BUY rating on EPACK Durable with a revised target price of Rs413, valuing the stock at 30x Sep-27E EPS, a multiple we consider fair given its strong growth visibility. With the Hisense facility set to begin mass production by Q4FY26, the company is well-positioned for a sharp rebound in FY27E. We expect a 28% revenue CAGR over FY25–28E, supported by an improving product mix, better operating leverage, and sustained momentum in the SDA, LDA, and components segments. The Hisense JV, focused on exports, further strengthens EPACK’s growth profile by reducing dependence on the domestic market, thus reinforcing our positive view on its medium-term outlook.
