Company Update : EPACK Durable by JM Financial Services
1QFY26 first cut: Revenue growth weak; PAT in-line
* 1QFY26 first cut: EPACK's 1Q revenue registered a 14% YoY decline to INR 6.6bn. This was a 5% miss on our estimate. However, strong growth in the components business drove up gross margins 170bps higher YoY to 15.7%. This supported with lower-thanexpected operating costs drove a 7% beat on EBITDA. Absolute EBITDA stood at INR 546mn, +6% YoY and margins stood at 8.2%, +150bps YoY and 90bps ahead of expectations. However, due to higher depreciation and finance costs, PAT at INR 228mn, -3% YoY was in-line with estimate of INR 231mn.
* Further decoding the revenue performance: The revenue decline was primarily owing to a weak season for the RAC segment which contracted 34% YoY impacted by suboptimal demand. Further, the SDA (small domestic appliances - induction cooktops, mixer grinders, air fryers, and water dispensers) segment recorded a 16% YoY growth driven by strong order intake across both established and newly launched products, with notable growth in demand for Air Fryers. EPACK's LDA (large-domestic appliances - washing machines and air coolers) segment grew 29% YoY, with customer base expansion being a key strategic growth driver.
* Ramp up of Sri City facility and components business: Incrementally, as the newly set up Sri City facility ramps up, the component business has also shown good growth, rising 556% YoY, albeit over a low base; supported by a robust order pipeline for PCBs, copper parts, and plastic moulding components. EPACK also diversified into the energy meter sector in its component vertical thereby expanding beyond its high reliance on the consumer durables business.
* New Customers: In Q1, EPACK successfully commenced supply with 3 newly added customers, one of which includes the supply of washing machines to Hisense.
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SEBI Registration Number is INM000010361
