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ICICI Securities Report
We initiate coverage on Epack Durable Ltd. with a Buy rating and a DCF-based target price of Rs 555 (implying 73 times/43 times FY26E/FY27E earnings).
Epack Durable is a prominent contract manufacturer of room air conditioners and small/large domestic appliances. The company has drawn up a business template that involves:
thriving core RAC business; and
SDA/LDA business expansion.
We see this strategy driving growth over FY24–27E. Key points:
Epack is geared to tap into robust growth envisaged in the RAC segment led by: constant capacity/client additions; and component business expansion. Strategic tie-ups with Hisense India and Panasonic Life Solutions India may drive incremental growth in the RAC/components segments.
Entry into LDA and existing SDA segment's expansion may enable: product portfolio diversification; and higher asset turns/ margins.
With strong RAC growth in the offing, we assess, high-capacity utilisation at its Sri City plant playing a pivotal role.
Growing salience of SDA/LDA may aid in diluting the seasonality-led impact on RAC's profitability.
We model Epack to report revenue/PAT CAGR of 41.7%/52.2% over FY24–27E.
Key risks: Higher-thanexpected insourcing by brands and steep competition.
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