This article first appeared on GuruFocus .
Release Date: August 12, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
EPACK Durable Ltd ( NSE:EPACK ) achieved its highest-ever quarterly revenue of Rs 886 crore, a 34% year-on-year growth, driven by strong performance across its portfolio.
-
The company is successfully diversifying its revenue mix, with small and large domestic appliances growing 68% year-on-year, reducing dependence on the core room air conditioner business.
-
EPACK Durable Ltd ( NSE:EPACK ) expanded its customer base to 72 customers across 19 product categories, with new product launches and a pipeline of four more categories, enhancing revenue stability.
-
The partnership with Hisense is scaling well, contributing approximately Rs 65 crore in Q1 revenue from air conditioners, with plans to start front-load washing machine production by end of October.
-
Management is actively working to reverse PLI discounts passed to customers, aiming to normalize EBITDA margins by the end of FY27, which should improve profitability going forward.
-
Capacity utilization at the Sri City plant has improved significantly from less than 25% to nearly 50%, with overall plant utilization expected to exceed 60% for FY27, indicating better operating leverage.
Negative Points
-
EBITDA margin declined to 6.21% from 8.24% year-on-year, impacted by the absence of PLI income (Rs 13.31 crore accrued in Q1 FY26) and increased input costs, though on a like-to-like basis, margin improved only 15 basis points.
-
The company reported a net profit of only Rs 11.8 crore, reflecting margin pressure from commodity price increases and foreign exchange losses, which were not fully passed on to customers.
-
Q2 and Q3 historically remain loss-making quarters due to seasonality in the air conditioner business, and management expects it will take four to six quarters to fully mitigate this impact.
-
Finance costs increased by Rs 3-4 crore quarter-on-quarter due to higher working capital requirements, driven by inventory buildup for regulatory compliance (BIS/QCO) and seasonal demand.
-
The company faces ongoing challenges from regulatory changes, such as BIS and QCO amendments, which necessitate maintaining higher inventory levels, increasing working capital needs and costs.
-
Depreciation is expected to rise further with an additional Rs 60-70 crore of capex to be capitalized over the next nine months, potentially weighing on profitability in the near term.
Q & A Highlights
-
Warning! GuruFocus has detected 9 Warning Signs with NSE:EPACK.
-
Is NSE:EPACK fairly valued? Test your thesis with our free DCF calculator.
Q: What are the top 2-3 execution priorities for the next few quarters, and what are the biggest risks (demand shifts, regulatory changes, or competitive pressure) and how is EPAC preparing to manage them? A: Ajay DD Singhania (MD & CEO) stated that the air conditioner industry continues to have strong tailwinds and a long-term growth story. The company is aggressively expanding into small and large domestic appliances (SDA/LDA), where they see strong growth momentum and customer traction, particularly in washing machines. The strategy is to diversify the revenue mix to reduce dependence on a limited set of customers and products, positioning EPAC as a preferred manufacturing partner across multiple categories.
Q: Can you break up the 44% growth reported in RAC between volume and value? A: Ajay DD Singhania (MD & CEO) explained that of the 44% total revenue growth for room air conditioners (RAC), approximately 30% is volume growth and 12-15% is value growth driven by increased average selling prices (ASPs) and the pass-through of commodity costs. He confirmed that the 30% volume growth was largely driven by their anchor customer.
Q: What is the current inventory level situation in the industry, and is there any concern about compressor availability given the BIS norms expiring in March 2027? A: Ajay DD Singhania (MD & CEO) noted that the current inventory situation is one of the most comfortable for the AC industry, with trade inventory largely liquidated and at its lowest acceptable level (estimated at 3.5 to 4 million units). Regarding compressors, the government has allowed imports until the end of the year, and significant domestic capacity has been installed and is in the pipeline, expected to be operational by December. He does not foresee any significant challenge in procuring compressors and confirmed EPAC is not looking to set up its own compressor capacity, relying instead on strategic tie-ups with large suppliers.
Q: What was the CapEx spend in Q1, and what is the outlook for the full year? A: Ajay DD Singhania (MD & CEO) stated that Q1 CapEx was roughly Rs 10 crores. Out of the total budget of Rs 450 crores announced at the beginning of FY26, approximately Rs 340-350 crores has already been booked, with an additional Rs 42-45 crores in CWIP. They estimate a total additional CapEx of around Rs 60-70 crores for the balance of the year.
Q: What is the growth outlook for FY27, and is there scope to improve EBITDA margins from the current ~6% level? A: Ajay DD Singhania (MD & CEO) said the AC industry is expected to grow around 20% this year, and EPAC expects to surpass that, with SDA/LDA growing at a much faster rate. On margins, he noted that ~1.5-2% of the EBITDA has historically been PLI benefit, which was partly passed on to customers. Since FY27 is the last year of PLI benefit, the company has started rolling back the PLI discounts shared with customers and aims to completely reverse them by the end of the year, which should lead to a more normalized EBITDA next year.
Q: Can you provide the capacity utilization rates for the plants, and what is the outlook for FY27? A: Ajay DD Singhania (MD & CEO) reported that for Q1, the Dehradun and Diwadi plants had capacity utilization closer to 90%, while the Sri City plant saw a significant improvement to almost 50% utilization (up from less than 25% previously). For FY27, the company is targeting an overall average utilization of more than 60% across all three plants, driven by ramping up non-AC business to improve utilization during the non-AC season.
Q: How is the partnership with Hisense progressing, and what are the revenue expectations? A: Ajay DD Singhania (MD & CEO) stated that for the January-to-June season, they delivered close to 60,000 air conditioners to Hisense, contributing approximately Rs 120 crores in revenue. In Q1 alone, they delivered 35,000 units with revenue of around Rs 65 crores. He confirmed they are on track to begin front-load washing machine pilot production by the end of Q2, with mass production targeted for end of October. The cumulative revenue expected from the Hisense partnership over the next five years is Rs 8,000 crores, and they are largely on track for the first year.
Q: Historically, Q2 and Q3 have been loss-making quarters. With the ramp-up in washing machines and SDA, can we expect these quarters to become profitable on a structural basis? A: Ajay DD Singhania (MD & CEO) acknowledged that Q2 and Q3 have historically been loss-making due to heavy dependence on air conditioners. The entire strategy around SDA and LDA is to first neutralize these losses. He stated that over the next four to six quarters, they believe they should be able to bring the bleeding situation largely under control. He clarified that top-load fully automatic washing machines are already in production serving three large multinational brands, while the front-load category (a higher price point) is the newer category being targeted for mass production by end of September/October.
Q: What is the reason for the large rise in other expenses (over 50% increase)? A: Rajesh Kumar Mittal (CFO) explained that the increase in other expenses is primarily due to a forex loss of around Rs 6-7 crores booked in the current quarter. Apart from that, the overall increase is in line with the significant growth in sales and production value, which was up more than 35% year-on-year.
Q: Can you provide a breakdown of the revenue mix and the margin profile of the SDA/LDA segments compared to AC? A: Ajay DD Singhania (MD & CEO) stated that out of total revenue of Rs 886 crores, approximately Rs 660 crores comes from room ACs, with the balance from non-AC (SDA, LDA, and components). The SDA/LDA business grew from approximately Rs 80 crores last year to Rs 130 crores this year (a 68% growth). He noted that SDA and LDA gross margins are typically 1.5 to
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
