Brokerage house Nirmal Bang Institutional Equities has reiterated a BUY rating on EPACK Durable (EPACK), setting a target price (TP) of INR 413 against the current market price of INR 262, implying a substantial 56% upside. The firm’s latest conference note underscores EPACK Durable’s evolution from an air-conditioner (AC)-focused manufacturer into a diversified consumer durables player, poised for strong growth through FY28.
A Structural Transformation Underway
EPACK, one of India’s leading original design manufacturers (ODMs) for consumer appliances, is in the midst of a major strategic diversification. The company, historically dependent on room air conditioners (RAC), is now expanding aggressively into washing machines, televisions, and small domestic appliances (SDA) — including vacuum cleaners, coffee makers, and high-margin sound systems.
Management, led by Group CFO Narayan Lodha, emphasized that while Q2FY26 faced short-term turbulence due to the GST transition and an extended sales disruption of 1.5 months, the long-term trajectory remains intact. They expect mid-teen growth for FY26 and a compound annual growth rate (CAGR) of 18–20% over the medium term.
Financial Outlook: Growth Resumes in FY27–28
Nirmal Bang’s financial model points to a robust recovery beginning FY27, coinciding with the ramp-up of the Hisense joint facility and the scale-up of component capacities.
Key highlights from the Financial and Valuation Summary include:
| Metric | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Net Sales | 2,170.9 | 2,349.8 | 3,266.3 | 4,561.9 |
| Growth YoY (%) | 52.9 | 8.2 | 39.0 | 39.7 |
| EBITDA Margin (%) | 7.3 | 6.8 | 7.5 | 7.8 |
| Adj. PAT | 55.1 | 44.6 | 102.9 | 161.0 |
| ROCE (%) | 6.5 | 4.8 | 8.6 | 11.4 |
| P/E (x) | 48.5 | 59.9 | 26.0 | 16.6 |
Analysts expect revenue CAGR of 28% between FY25–FY28, with PAT CAGR near 43% as profitability normalises post-expansion. The brokerage values EPACK at 30x Sep-27E EPS, a multiple it deems justified by the company’s accelerating earnings trajectory and strengthening business mix.
Component Manufacturing
A standout feature of EPACK’s strategy is its backward integration into components, including printed circuit boards (PCBs), plastic parts, and sheet metal. Compressors, which account for roughly 20% of AC cost, remain outsourced, but the rest of the value chain is being localized.
This component expansion not only improves cost efficiency and supply resilience but also creates a natural entry barrier for competitors. The company targets an output of 4 million components annually, supporting its 2 million-unit AC base and other product lines.
Select PCB components for sound boxes and premium speakers carry exceptionally high margins of 40–50%, enhancing blended profitability. Moreover, EPACK Durable plans to extend PCB applications to smart meters, small appliances, and even automotive parts, signalling multi-sector growth potential.
Product Diversification: Reducing Cyclicality
EPACK’s strategy to de-risk its earnings from RAC seasonality is well underway:
- Washing Machines (WM): Focused on fully automatic top-load (7–15kg) and upcoming front-load models. High-end variants are preferred over low-margin entry-level products.
- Televisions (TV): Entering via assembly-led operations, with lower margins than ACs but offering steady year-round volume.
- Small Domestic Appliances: Categories such as vacuum cleaners, coffee makers, and sound systems target higher-margin, premium segments with sustained demand.
This broadening of the portfolio, coupled with client diversification beyond Voltas (which still contributes ~40% of volume), positions EPACK Durable as a multi-product OEM platform rather than a single-segment manufacturer.
Capex & Return Focus
The management has outlined an INR 450 crore capex plan, with INR 350 crore to be deployed in FY26 itself. This investment primarily supports component capacity expansion and new product categories, not just incremental AC capacity.
A stringent 5x asset-turn target and a ROCE goal above 15–16% anchor EPACK’s capital discipline. Current ROCE hovers around 10%, but analysts see a clear path to mid-teen returns as capacity utilization improves.
Macro Tailwinds and Export Leverage
With India’s air conditioner penetration still below 10%, industry growth potential remains substantial. EPACK expects the AC segment to rebound 25–30% in H2FY26, aided by inventory normalisation and favourable weather patterns.
Furthermore, the Hisense JV—slated for mass production by Q4FY26—is expected to accelerate exports, reduce dependence on domestic seasonality, and expand the ODM footprint internationally.
Valuation and Outlook
At 16.6x FY28E P/E, EPACK Durable trades at a discount to peers like Amber Enterprises and Dixon Technologies, despite comparable long-term growth prospects. Nirmal Bang argues that margin expansion, product diversification, and strong client partnerships justify re-rating potential.
The brokerage’s target price of INR 413 implies a 56% upside, driven by:
- Component-led margin expansion
- Scale benefits across categories
- Export growth via Hisense
- Improved operating leverage post-FY26
EPACK Durable Post-IPO Journey
Epack Durable launched its IPO in January 2024, raising INR 640.05 crore, including a fresh issue of INR 400 crore and an offer for sale (OFS) of INR 240.05 crore. The IPO received strong investor interest and was subscribed 16.4X. However, despite the robust subscription, the listing performance was weak, and the stock debuted with a 9.74% loss.
The story didn’t end there. The stock gained significant momentum afterward and reached its all-time high of INR 624.35 on 7 January 2025, delivering an impressive return of approximately 179% from its IPO price of INR 230.
Currently, the stock has corrected sharply from its peak and is trading at INR 262 per share, reflecting a decline of about 59% from its all-time high.
Key Risks
Analysts caution that potential risks include:
- Volatility in RAC demand is tied to weather and consumer sentiment
- Execution delays in scaling new component capacities
- Slower adoption of premium washing machine models
- Regulatory changes under the new BIS norms affecting product costs
Bottom Line
Nirmal Bang’s bullish stance on EPACK Durable underscores confidence in the company’s structural transformation from an air-conditioner assembler to a vertically integrated, multi-product consumer durable manufacturer.
With strong execution, expanding component depth, and diversified growth levers, EPACK appears well-positioned to deliver superior earnings growth and improved returns through FY28—making it one of the more compelling mid-cap manufacturing plays in India’s consumer electronics landscape.
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