💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 52.9% YoY to INR 2,170.9 Cr in FY25. Segment contributions are RAC (56%), Small Domestic Appliances (19%), Components (16%), and Large Domestic Appliances (2%). However, H1 FY26 saw a 23.9% YoY decline to INR 875.7 Cr, with the RAC segment contracting 76% QoQ in Q2 FY26 due to unseasonal rains and GST implementation delays.

Geographic Revenue Split

Manufacturing is concentrated in Dehradun, Bhiwadi, and Sri City. The company recently incorporated EPACK Durable Global Sales LLC-FZ in the UAE to target the Middle East and Africa (MEA) export markets, though specific regional percentage splits are not disclosed.

Profitability Margins

Net Profit Margin improved slightly from 2.49% in FY24 to 2.54% in FY25. However, H1 FY26 PAT margin collapsed to 0.07% from 1.29% YoY, with a net loss of INR 22.2 Cr in Q2 FY26 due to high fixed costs and seasonal revenue decline.

EBITDA Margin

EBITDA margin was 7.26% in FY25, a decrease of 93 bps from 8.19% in FY24. H1 FY26 EBITDA margin stood at 6.44%, up 110 bps YoY despite lower volumes, aided by better product mix and cost efficiencies.

Capital Expenditure

Planned strategic capital expenditure of INR 450 Cr to INR 500 Cr to be completed by Q1 FY27. In Q2 FY26 alone, the company incurred INR 129 Cr primarily for capacity expansion and equipment installation at new facilities.

Credit Rating & Borrowing

ICRA maintains a credit rating that factors in moderate operating margins and seasonality. Interest costs rose 38.5% YoY to INR 53.9 Cr in FY25, reflecting increased borrowing for capacity expansion.

⚙️ Operational Drivers

Raw Materials

Key materials include Copper Parts, PCBs (Printed Circuit Boards), Plastic Molding Components, and Cross Flow Fans (CFFs). Raw material costs represent approximately 92.7% of total expenses based on FY25 figures.

Import Sources

The company is actively pursuing backward integration to reduce reliance on imports, particularly from China and Thailand, which are now restricted by BIS certifications.

Key Suppliers

Not specifically named in the documents, but the company manages a 'diverse pool of suppliers' and enters into long-term sourcing arrangements to mitigate price volatility.

Capacity Expansion

Current RAC capacity is 3 million units. Planned expansion includes the Sri City facility for Hisense and ramping up SDA/LDA lines to cater to market demand for FY27 and onwards.

Raw Material Costs

Raw material and component costs increased in line with the 53% revenue growth in FY25. The company uses pass-through clauses with key clients to mitigate commodity price hikes, though lags in price revisions can impact short-term profits.

Manufacturing Efficiency

The company is the 2nd largest ODM for Room Air Conditioners in India. Efficiency is driven by high backward integration, producing key components in-house to maintain a cost advantage over competitors.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

25-30%

Growth Strategy

Growth will be driven by diversifying into Small Domestic Appliances (SDA) and Large Domestic Appliances (LDA), adding 15 new customers in the SDA segment, and executing a 'Strategic Cooperation Agreement' with Hisense through the new EMTPL subsidiary. The INR 500 Cr capex will double down on component manufacturing for external sale.

Products & Services

Room Air Conditioners (RAC), Air Fryers, Mixer Grinders, Nutri Blenders, Infrared Cooktops, Vacuum Cleaners, Coffee Makers, and Washing Machines.

Brand Portfolio

EPACK Durable (ODM/OEM), Epavo (JV for motors), Bumjin (Audio products JV).

New Products/Services

Launched Air Fryers, Vacuum Cleaners, and Coffee Makers in Q2 FY26. New product lines in the SDA segment are expected to be a major growth lever for FY27.

Market Expansion

Expanding into the MEA (Middle East & Africa) market via a new UAE entity and increasing domestic footprint through the Sri City facility.

Market Share & Ranking

Ranked as the 2nd largest Room Air Conditioner ODM in India.

Strategic Alliances

50:50 JV with Ram Ratna Group (Epavo Electricals) for induction motors; Strategic Cooperation Agreement with Hisense; JV with Bumjin for audio products.

🌍 External Factors

Industry Trends

The industry is shifting toward domestic value addition fueled by the PLI scheme and BIS certifications. The RAC market is evolving from seasonal to year-round demand, though weather remains a primary driver.

Competitive Landscape

Stiff competition from other OEMs/ODMs; however, EPACK's scale as the #2 player provides volume-based cost efficiencies.

Competitive Moat

Moat is built on 'Advanced Vertically Integrated Manufacturing' and long-standing relationships with top-tier brands. This is sustainable because high capital requirements and technical certifications (BIS) create high entry barriers.

Macro Economic Sensitivity

Highly sensitive to consumer spending power and interest rates which affect big-ticket purchases like RACs and Washing Machines.

Consumer Behavior

Shift toward premium and smart appliances; growing demand for Small Domestic Appliances (SDA) like Air Fryers and Nutri Blenders.

Geopolitical Risks

Trade barriers on imports from China and Thailand due to BIS norms provide a competitive advantage to EPACK as a domestic manufacturer.

⚖️ Regulatory & Governance

Industry Regulations

Mandatory BIS (Bureau of Indian Standards) certification for RACs, SDAs, and LDAs. Participation in the Production Linked Incentive (PLI) scheme for RACs and components requires meeting specific investment and incremental sale targets.

Environmental Compliance

Not specifically disclosed in INR, but the company must comply with manufacturing standards for consumer durables.

Taxation Policy Impact

Effective tax rate was approximately 25.9% in FY25 (INR 19.3 Cr tax on INR 74.4 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

Seasonality of the RAC business (80-85% revenue exposure) and volatility in commodity prices (Copper/Aluminum) which can impact margins by 1-2% if not passed through immediately.

Geographic Concentration Risk

Manufacturing is concentrated in three Indian states; however, the client base is pan-India and global.

Third Party Dependencies

Dependency on marquee brands like Voltas and Haier for order volumes; loss of a single major client could impact revenue by over 10%.

Technology Obsolescence Risk

Risk is mitigated by continuous R&D and design optimization for new energy-efficient RAC models and smart appliances.

Credit & Counterparty Risk

Debtors Turnover Ratio improved significantly to 8.23x in FY25 from 3.95x in FY24, indicating improved receivables management.