Epack Durable Ltd Q4 FY2025 Concall Summary

Key Takeaways

• FY25 revenue surged 53% YoY, powered by a 50% jump in the core RAC segment and a multifold rise in large domestic appliances, as the company rode strong industry tailwinds.
• Margins expanded despite new-plant drag: Gross margin improved ~110 bps YoY on price hikes and a richer product mix, while the Sri City facility weighed on EBITDA; management targets a recovery to 7.5%+ in FY26 as utilization ramps.
• The Hisense ODM ramp is now live: AC supplies began in March 2025, washing machine mass production is aligned for end-June, and a dedicated subsidiary plant is under construction, setting up a material new revenue stream.
• A capex-heavy year ahead with ₹450–500 Cr planned across the parent, the Hisense subsidiary, and the Epavo JV, doubling the plant count from 4 to 6 and the customer base from 55 to 70.
• What to watch next quarter: Whether the unseasonal-rain demand blip in May clears as expected, the pace of the washing machine and BLDC motor ramp-ups, and any update on the ECMS PLI application.

Revenue Growth & Segment Mix

• RAC remains the engine: 64% of Q4 revenue, growing 50% YoY, with the company aiming to surpass the industry's forecast 15–20% growth in FY26.
• Components business tripled: Grew 124% YoY, boosted by higher-margin sales and the start of BLDC motor supplies to nearly all customers after a 2.5-year development cycle.
• SDA growth is bifurcated: Mature categories like mixer grinders are flattish at 3–4%, while newly localized products (air fryers, coffee makers) are the attractive growth pockets.
• Coolers doubled, with more to come: FY25 cooler revenue hit ~₹60 Cr from just 1.5 quarters of contribution from two new marquee customers; management aims to double that again this year.
• Washing machines are the next leg: Trial production done, field trials approved for at least 3 key customers, with a significant ramp-up expected from Q3 onwards.

Ajay Singhania: "So, we are very confident in terms of our product acceptance in the market and its competitiveness in terms of both the domestic players as well as imports."

Margin Walk & Operational Efficiency

• Gross margin levers: A ~2% price increase with some customers and a shift toward higher-margin components and other products drove the ~110 bps YoY gross margin expansion.
• Sri City is the near-term drag: The new plant depressed overall EBITDA margins in FY25; management expects capacity utilization to reach optimal levels over the next 2–3 quarters as SDA and LDA production are introduced.
• Working capital swelled on supply-chain disruption: QCO-driven copper and compressor shortages forced the company to carry extra inventory to meet peak-season demand, while accounts payable days fell due to vendor payments.
• Asset efficiency is improving fast: Net asset turn rose from 2.6x in FY24 to nearly 3.2x in FY25, with a stated objective of reaching at least 4x by FY27.

Strategic Expansions: Hisense, Epavo & New Facilities

• Hisense ODM is now a multi-category reality: AC supplies started March 2025; washing machine pilot production is done, with mass production aligned from end-June 2025.
• Dedicated subsidiary plant under construction: The wholly owned subsidiary EMTPL is being built for the Hisense business, with production scheduled to start around December–January.
• Epavo JV adds component depth: The greenfield JV will commence production from Q2 FY26, housing the new BLDC motor facility and strengthening the company's backward-integration story.
• Bhiwadi greenfield breaks ground: Construction has started on a new facility for RAC, LDA, and SDA categories, with completion targeted by end-FY26.
• Customer and plant count set to jump: The company plans to grow from 4 plants to 6 and from 55 customers to 70 within FY26, adding at least 2–3 marquee RAC names.

Demand Signals & Near-Term Risks

• May was a bad month: Management acknowledged that unseasonal rains hit secondary AC sales in May, creating a short-term demand impact.
• But customer schedules are holding: No customer has indicated substantial concerns around previously shared schedules; some corrections are happening but nothing deemed worrying for the full financial year.
• Trade inventory is elevated: Per an analyst's math, roughly 2–3 weeks of additional inventory sits in the channel, which could take 3–4 months to clear, leaving Q1 with a higher base. Management did not quantify the overhang, saying discussions with key customers are ongoing and sentiment for Q2 movement is positive.
• BEE rating timeline is unresolved: The industry is in a wait-and-watch mode; implementation could happen from January or be deferred by another year, creating uncertainty around product-line transitions.

Ajay Singhania: "None of the customers have indicated any substantial concerns around the schedules which have been shared earlier, although, some corrections are happening, but nothing substantial or, let's say, worrying to affect the overall financial year."

Product Pipeline & Technology Bets

• BLDC motors move from development to supply: After 2.5 years of work, motors are validated, approved, and supplies have commenced; the new Epavo greenfield facility will start production from Q2 FY26, with a further ramp-up next year.
• New SDA launches are queued up: Air fryers have already started; infrared ignition cooktops, nutri-blenders, coffee makers, vacuum cleaners, and hair dressers are in the pipeline for FY26 and FY27.
• BEE-upgraded portfolio is ready: The company has already developed and started offering upgraded-efficiency products to customers for testing and validation, positioning ahead of any regulatory change.
• Washing machine approvals are in hand: Field trials are done and approvals received from at least 3 key customers, with the ramp-up expected from end-June and a significant step-up from Q3.

Guidance & Commitments

Key Metrics