EPACK Durable growth accelerates as Hisense ramp and diversification support margin recovery

Investment View and Key Takeaways

In its August 13, 2026 result update, ICICI Direct Research maintained its BUY view on EPACK Durable Limited with a target price of Rs 275, compared with a CMP of Rs 212. The broker considers the Q1FY27 performance an initial sign of strong, broad-based business growth, with diversification, customer additions and the Hisense partnership central to its outlook.

EPACK Durable is an Indian original design manufacturer and original equipment manufacturer of room air conditioners (RAC), small domestic appliances (SDA), large domestic appliances (LDA) and components.

Q1FY27 Financial Performance

EPACK Durable reported its highest-ever quarterly revenue of Rs 886 crore in Q1FY27, up 34 per cent year on year and 50 per cent quarter on quarter, aided by recovery in summer products.

RAC revenue growth was driven by around 30 per cent volume growth and around 14 per cent value growth from higher average selling prices and commodity-price pass-through. SDA and LDA growth was led by air fryers and washing machines.

Reported Q1FY27 EBITDA was affected by forex losses, input-cost inflation and the accounting change for production-linked incentive income. EBITDA excluding the prior-year Rs 13.3 crore of production-linked incentive income was around 6.4 per cent in Q1FY26, implying an approximately 15-basis-point year-on-year improvement in the underlying margin. Profit after tax declined due to investment-related expenses, forex loss and the production-linked incentive accounting change; ICICI Direct states that the adjusted profit decline would have been limited to single digits.

Capacity Utilisation and Margin Recovery

Management indicated that most commodity cost increases have been passed through, although forex remains a larger margin headwind. It is targeting utilisation above 60 per cent across its three plants in FY27. The older Dehradun and Bhiwadi plants operated above 85 per cent utilisation in Q1FY27, while the newer Sri City facility reached around 50 per cent.

ICICI Direct expects capacity ramp-up, a richer non-RAC mix, gradual withdrawal of production-linked-incentive-linked customer discounts and operating leverage to support a recovery in underlying EBITDA margin. SDA and LDA gross margins are estimated to be around 150 to 200 basis points above RAC margins.

Customer, Product and Hisense Diversification

Customer and product diversification is progressing, with 73 customers and 19 product lines in production after the addition of two customers in Q1FY27. Management expects around 75 customers and 20 product lines by FY27-end.

The Hisense partnership produced around 35,000 ACs in Q1FY27 and generated around Rs 65 crore of quarterly revenue. Front-load washing-machine pilot production is under way, with production targeted from October. Management sees a cumulative Hisense revenue opportunity above Rs 8,000 crore over five years.

The company aspires to Rs 5,000 crore revenue by FY29, supported by RAC, faster-growing SDA and LDA, washing machines, components, new customers and strategic partnerships.

Earnings Outlook and Valuation

ICICI Direct forecasts revenue to grow from Rs 1,895 crore in FY26 to Rs 2,566 crore in FY27E and Rs 3,178 crore in FY28E, implying around 30 per cent CAGR over FY26-FY28E. It estimates EBITDA of Rs 177 crore and Rs 241 crore in FY27E and FY28E, respectively, with margins recovering to 6.9 per cent and 7.6 per cent.

The target price of Rs 275 is based on 30 times FY28E EPS of Rs 9.2.

Key Risks

• Intensifying competition.
• An underwhelming demand recovery.
• Execution risk in new ventures.
• Near-term geopolitical uncertainty that could pressure profitability.