One of the small-cap stocks engaged in the manufacturing of room air conditioners and home appliances. The company is the second-largest manufacturer of room air conditioners in India, with a 24% market share. The stock hit a 5 percent upper circuit after a 26% stake acquisition by the Chinese company.
Stock Price Movement:
With a market capitalization of Rs. 4,814.22 crores, the shares of Epack Durable Limited’s stock surged by 5 percent, reaching an upper circuit of Rs. 501.65 per share on Thursday, up from its previous closing price of Rs. 478.40 per share.
What Happened:
EPACK Durable Limited clarifies business discussions regarding the potential acquisition of a 26% stake by China’s top TV company in its subsidiary. This strategic investment aims to strengthen the company’s presence in the Indian market and enhance its manufacturing capabilities.
Margin Guidance
EPACK Durable Limited’s management acknowledges a dip in margins due to the higher revenue contribution from lower-margin air conditioners. However, EBITDA margins are expected to stabilize as capacity utilization improves in Q3 and Q4.
Operational Highlights:
In Q2 FY25, EPACK Durable Limited’s product business generated 98% of total revenues, with air conditioners contributing 70% of the product revenue, showing 187% year-on-year growth.
The Sricity plant achieved only 10% capacity utilization in H1 FY25, impacted by fixed overheads. The company focuses on enhancing capacity utilization at the Sricity facility as part of its long-term strategy.
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Future Outlook:
EPACK Durable Limited projects 40-50% revenue growth for FY25, with its air conditioning business expected to grow similarly. The company targets an asset turn of 4.5, with new product lines driving improved margins.
The company anticipated growth in washing machines and coolers will contribute in FY26. Management is confident of achieving a 15-17% ROE and ROCE in the next 2-3 years, driven by strong demand and strategic initiatives.
Recent quarter results and ratios:
EPACK Durable Limited’s revenue has increased from Rs. 178.10 crore in Q2 FY24 to Rs. 377.10 crore in Q2 FY25, which has grown by 249.33 percent. The company is incurring a net loss of Rs. 8.49 crore in Q2 FY25.
EPACK Durable Limited’s revenue and net profit have grown at a CAGR of 24.49 percent and 63.55 percent, respectively, over the last three years.
In terms of return ratios, the company’s ROCE and ROE should be 8.32 percent and 5.85 percent, respectively. The debt-to-equity ratio of the company is to be 0.54x. EPACK Durable Limited’s EPS is to be Rs. 5.09.
Company Overview:
EPACK Durable Limited was established in 2019 and is a leading Original Design Manufacturer (ODM) specializing in room air conditioners and home appliances. It holds the position of the second-largest manufacturer of room air conditioners in India, with a market share of around 24% as of FY25.
Written By – Nikhil Naik
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