Summary
EPACK Durable Limited - Q3 FY 2026 Earnings Call Summary Wednesday, January 21, 2026 11:30 AM
Event Participants
Executives 4 Ajay DD Singhania (MD & CEO), Bajrang Bothra (Chairman & WTD), Narayan Lodha (ED & Group CFO), Rajesh Kumar Mittal (CFO)
Analysts 11 Achal Lohade, Aniruddha Joshi, Anupam, Arshia Khosla, Aryan Bhatia, Ashish Jain, Balasubramanian, Deepali Bansal, Heta, Praveen Sahay, Raman KV, Sucrit D Patil, Vidhi Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹427.8 crores | +13.5% YoY; Growth driven by 61% surge in components and 74% in LDA, offsetting a marginal 1% decline in RAC. |
| EBITDA | ₹31.7 crores | +31.5% YoY; Strong growth attributed to improved product mix and higher capacity utilization. |
| EBITDA Margin | 7.41% | +102 bps YoY; Expansion driven by increased contribution from high-margin SDA and Component segments. |
| Net Profit (PAT) | ₹2.6 crores | +4.0% YoY; Growth tempered by higher depreciation and finance costs associated with recent capacity expansions. |
| PAT Margin | 0.61% | -5 bps YoY; Contraction due to capital-intensive expansion phase and higher borrowing costs. |
| Capex (Q3 FY26) | ₹44 crores | Investment focused on washing machine lines, Sri City component plant, and Bhiwadi greenfield facility. |
| RAC Contribution | 57-60% | Decreased from 80% historical levels as the company diversifies into SDA and LDA. |
| Component Revenue | +61% YoY | Growth supported by a robust order pipeline for PCBs, copper parts, and plastic molded components. |
Geographic & Segment Commentary
- Room Air Conditioners (RAC): Segment witnessed a marginal 1% YoY decline in Q3; however, management expects 15-20% volume growth for the upcoming calendar year 2026 season. BEE rating upgrades (effective Jan 2026) and commodity inflation have necessitated an 8-10% price hike across the industry.
- Components: Recorded standout 61% YoY growth, supplying to RAC, electrical meters, coolers, and washing machine sectors. Strategic focus remains on high-growth areas like cross-flow fans and PCBs to increase wallet share with marquee clients.
- Small Domestic Appliances (SDA): Grew by 30% YoY, driven by successful traction in air fryers and nutri-blenders. Company plans to launch vacuum cleaners and tower fans in Q4 FY26 to further widen the portfolio.
- Large Domestic Appliances (LDA): Reported 74% YoY growth, primarily fueled by the ramp-up of the washing machine business. Management is expanding from semi-automatic and top-load models into the front-load segment through the Hisense JV.
Company-Specific & Strategic Commentary
- Product Diversification: Reduced RAC revenue dependence from 80% to ~60% in three years, targeting 55% in the medium term to mitigate seasonality.
- Customer Acquisition: Added 2 new customers in Q3, taking the total base to 67; top 2 customers now account for 35-40% of revenue, down from 70% previously.
- Manufacturing Expansion: Total FY26 nine-month capex reached ₹218 crores; new Bhiwadi greenfield plant and Hisense JV facility are set to commence production in Q4 FY26.
- Vertical Integration: Epavo (motor subsidiary) is expected to turn profitable (green) in FY27 as it ramps up BLDC motor production for ACs and washing machines.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Annual Revenue | Flattish to Marginal Growth | Soft RAC demand in H1 FY26 to be offset by strong performance in SDA, LDA, and Components. |
| AC Industry Growth | 15-20% Volume Growth | Outlook for Calendar Year 2026 based on low penetration and robust order books from brands. |
| Medium-term EBITDA Margin | 7.5% to 8.0% | Driven by higher scale, better product mix (SDA/LDA), and operational efficiencies. |
| Future Capex | ₹225 crores | Planned over the next 6-9 months for capacity expansion and equipment installation. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Inflation | Copper and aluminum price surges in Q3/Q4 may necessitate a second round of price hikes in early FY27, potentially affecting demand elasticity. |
| Inventory Overhang | Industry channel inventory sits at 4-4.5 million units of old-rated stock; while manageable, it requires liquidation through June 2026. |
| Seasonality | Despite diversification, ~60% of revenue remains tied to RAC, leaving the company vulnerable to unseasonal weather patterns. |
Q&A Highlights
RAC Industry & Pricing
- Question: What is the impact of new BEE norms and commodity costs on pricing? (Aniruddha Joshi)
- Answer: There is an 8-10% price escalation; roughly 50% is from BEE re-rating and 50% from the Q3 commodity lag. (Ajay DD Singhania)
Segmental Rationale
- Question: What specific initiatives are scaling SDA and LDA? (Sucrit D Patil)
- Answer: We are expanding product categories (air fryers, nutri-blenders) and moving into high-value LDA like front-load washing machines. (Ajay DD Singhania)
- Answer: Capital allocation is diligent; we only invest once an IRR is validated by customer interest and R&D approval. (Narayan Lodha)
Washing Machine Strategy
- Question: How are you positioning for the front-load category given low industry outsourcing? (Tanay Shah)
- Answer: Our Hisense JV has completed trial production; we aim to be a first-mover in domestic front-load manufacturing for both Hisense and third-party brands. (Ajay DD Singhania)
Margin Profile
- Question: How do margins compare across segments? (Praveen Sahay)
- Answer: RAC gross margins are lowest at 14-15%; SDA, LDA, and Components are higher at 16-18%, driving the overall 102 bps EBITDA margin expansion. (Ajay DD Singhania)
Key Takeaway
EPACK Durable delivered a resilient Q3 FY26, with revenue growing 13.5% to ₹427.8 crores despite a sluggish Room Air Conditioner (RAC) market. The quarter highlighted a successful strategic pivot, as non-RAC segments (SDA, LDA, and Components) saw explosive growth, reducing RAC revenue concentration to below 60%. EBITDA margins expanded by 102 bps to 7.41% due to this richer product mix and better utilization of the Sri City facility. Management has committed to a ₹450 crore capex cycle, with ₹218 crores already deployed to operationalize the Hisense JV and Bhiwadi plants. While FY26 revenue is expected to be flattish due to industry-wide RAC degrowth in H1, the outlook for CY2026 remains bullish with 15-20% volume growth projected. The company remains well-positioned to benefit from the 8-10% industry-wide price hikes and its expanding footprint in the high-margin washing machine and component sectors.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: