Company Overview

EPACK Durable Limited specializes in manufacturing white goods and small domestic appliances. It is leveraging strategic partnerships and expanding its manufacturing capacity to meet growing demand in the domestic and global markets. The company recently added new facilities, diversified its product lines, and initiated tie-ups with marquee brands like Hisense and Panasonic.

Key Financial Metrics (Q2 FY25)

Half-Yearly Metrics (H1 FY25)

Stock and Financial Metrics

Capex and Expansion Plans

1. Sri City Plant Utilization

• Current utilization: 10%
• Target utilization: 30% by FY25 end and 60%+ in FY26
• Investment enables a 50% increase in manufacturing capacity

2. Hisense Partnership

• New facility in Andhra Pradesh, with production starting in Q2 FY26
• Capex: INR 240 crores over three years
• Target capacity: 1.5 million AC units by FY28
• Expected revenue: $1 billion in five years

3. Diversification Efforts

• New product lines in small home appliances, washing machines, and coolers
• Pilot production for washing machines already completed; operations to begin by Q4 FY25
• Additional product expansion planned in collaboration with Panasonic

4. Backward Integration

• 75% of components manufactured in-house
• Recent increase in equity in motor manufacturing subsidiary to 50%

5. Planned Investments

• INR 50 crores allocated for upgrading existing facilities
• INR 230 crores from IPO proceeds to fund growth

Growth Drivers

1. Market Demand

• Revenue growth is supported by rising demand for air conditioners (187% YoY) and other home appliances
• Industry CAGR for air conditioners projected at 17%-18% over the next 3-4 years

2. Export Expansion

• Exports have grown threefold YoY, with upcoming certifications for markets like the US and Europe
• New facilities and partnerships to support increased export contributions

3. Product Mix Optimization

• Strategic focus on high-margin small appliances and new products
• Diversification reduces dependency on air conditioners, which currently account for 70% of product revenue

4. Operational Efficiencies

• Focus on maximizing asset turnover (target: 4.5x for core business, 5-6x for Hisense)
• Optimized capacity utilization at Sri City to improve margins

Challenges

1. Margin Pressure

• Current EBITDA margins are impacted by underutilized capacity at Sri City and increased fixed costs
• Air conditioners—a lower-margin product—dominate the revenue mix

2. Working Capital

• Temporary rise in debt due to reduced bill discounting
• Efforts to manage cash flows effectively by leveraging internal accruals and existing funds

3. Raw Material Dependence

• 45%-50% of raw materials are imported, exposing the company to forex and logistical challenges
• Efforts to localize supply through backward integration are ongoing but not complete

Projections

1. Revenue Growth

• FY25 revenue growth target: 50% YoY
• Long-term CAGR (next 5 years): 40%-50%

2. Profitability

• EBITDA margin target: ~8% by FY25, with improvements expected as utilization increases
• ROE/ROCE target: ~17% within 3 years

3. Capex

• Total planned investment: INR 290 crores over the next three years

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  Conclusion

  EPACK Durable Limited is poised for significant growth, supported by strategic capex, partnerships, and a diversified product portfolio. While margin pressures and working capital challenges remain, the company’s focus on operational efficiency, export expansion, and product mix optimization provides a solid foundation for long-term profitability. Investors should monitor utilization rates, export performance, and margin improvements as key indicators of future success.

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