EPACK Durable Ltd (EPACK) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to EPACK Durable Q2 FY '27 Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Tanay from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Tanay (DAM Capital Advisors Limited): Yeah, thank you, Anam. Good morning, and welcome, everyone, to EPACK Durable's Q2 FY '27 earnings call. Today, we have the management being represented by Mr. Ajay DD Singhania, Managing Director and CEO; Mr. Rajesh Kumar Mittal, Chief Financial Officer; and Mr. Nitin Gupta, GM Finance. At this point, I would hand over the call to Mr. Rajesh Mittal for his opening remarks, post which we will open up the floor for Q&A. Thank you, and over to you, sir.
Rajesh Kumar Mittal (EPACK Durable Ltd): Thank you, Tanay. Thank you all, and very good morning, everyone. Welcome to our earnings conference call of the second quarter and first half of the financial year 2027. I would like to thank DAM Capital for arranging today's earnings call. The key financial highlights for the quarter two of financial year '27 are as follows. For the second quarter, revenue from operations stood at INR439 crore, registering a strong growth of more than 106% on year-on-year basis, compared to INR213 crore in the corresponding quarter of the previous financial year. EBITDA for the second quarter stood at INR7.1 crore compared to INR0.5 crore in quarter two financial year '26, representing an improvement of approximately INR6.6 crore. The EBITDA margin improved to 6. 1.62% compared to 0.23% in the corresponding quarter of the previous year.
Rajesh Kumar Mittal (EPACK Durable Ltd): I would also like to highlight an important point regarding the comparability of EBITDA margins. The company has not accrued any PLI income in quarter two of the financial year '27, whereas it has accrued a PLI income of rupees 8 crore in quarter two on year-on-year basis, which sat within that quarter revenue. And because it carries no associated costs, it directly flowed the entire amount into the EBITDA. Excluding the PLI income for the previous revenue and EBITDA for quarter to financial year '26, EBITDA would have been negative rupees 7.5 crore, compared to positive EBITDA of rupees 7.1 crore during the current quarter. Accordingly, on a comparable basis, excluding PLI income, the company has achieved an EBITDA improvement of approximately 14.6 crore on year-on-year basis, reflecting an improvement in underlying operating performance. This will also a point here that this this EBITDA margin does not include the if I ignore the forex loss, the EBITDA EBITDA would have been improved by rupees 10 crore on half year basis. Now, I would request our Managing Director and CEO, Mr. Ajay DD Singhania to brief you on the operational highlights. Over to you, please, sir.
Ajay DD Singhania (EPACK Durable Ltd): Thank you, Rajesh ji. And once again good morning everyone. Let me begin with industry first. Primary sales for room air conditioners in July to September quarter were better than last year. Last year, wherein unseasonal rains, de-stocking around GST transition weighed on the industry, the quarter has been comparatively much better both in terms of primary and secondary sales. Secondary sales have remained healthy, and general inventory is at a comfortable level, which gives industry a cleaner starting point for the coming season. And we are seeing this in our customers' early production planning. Commodity prices, particularly copper, aluminium, plastics, as the FX fluctuation have been volatile throughout the period. Our contracts provide passing this cost, but passing is an ongoing process with a lag, especially when prices are moving as sharply as they are. In such periods, some compression in percentage margins is natural and it narrows as pricing catches up. In large appliance space, washing machines continue to grow ahead of broader market driven by shift to fully automatic and front-load models and by rising penetration beyond the top cities. In small appliances, kitchen categories such as air fryers, mixer grinders, induction cooktops continue to see strong traction as consumers premiumize and brands increasingly looking to source those categories from reliable domestic manufacturers. Air coolers had a softer year as channel inventory normalized and plastic costs soars. Against this backdrop, I'm pleased to share that EPACK Durable delivered its highest ever first half revenue of INR325 crores in H1 FY '26, up 51.3% year-on-year. In second quarter, revenue more than doubled to rupees 439 crore. The quarter also showed our diversification at work. Small domestic and large domestic appliances grew 57%. Washing machines and air fryers led the growth, and non-RAC businesses contributed 63% of the revenue for this quarter. For half year, SDA and LDA grew 62%. Our RAC business grew 58% in first half, supported by share gains with existing customers and contribution from new ones. In second quarter, RAC revenue grew 161%, partly on a low base of last year when unseasonal rains and de-stocking around GST transition hit the industry. Components grew 45% in the quarter, and we continue to deepen captive integration in heat exchangers, copper tubing, PCBs, cross-flow fans, and molded parts. We now serve 72 customers across 19 categories, and top two customers' concentration has come down to 32% from 72% earlier in H1 '26. During the year, we launched vacuum cleaners, tower fans, nutri-blenders, and added newer customers. For FY '27, our pipeline includes water heaters, washing machines, air fryers, and couple of other products which are under development. On our Hisense partnership, through EMPL, our wholly-owned subsidiary facility, though the last heat season we produced room air conditioners for Hisense, the next milestone is washing machine. Pilot production for front-load washing machine for Hisense is scheduled for end of November '26 with commercial production to follow.
Ajay DD Singhania (EPACK Durable Ltd): present state, EPACO Electricals joint venture with Ramakrishna Group RRVL who will hold now 100% of the joint. We are also winding up two subsidiaries, namely, Quinjiang India Auto Products and EPACK Electronic Components Private Limited. Both of them neither had any operating facility and nothing commenced on both of them. Our share of losses from EPACO was Rs. 2 crores for FY '26 and H1 of FY '27, and that drag now ends. Going forward, our capital and management attention will be fully on EPACK Durable and EMPPL. On margins, our reading is straightforward. We are scaling up the top line strongly and gaining share. And like-for-like, EBITDA grew 77% in the half. Reported profitability is being held back by depreciation and interest on new capacity, a lag in passing through commodity cost, the absence of PLI income and seasonality, not by any weakness in demand of competitiveness. As facilities get build up, fill up, fixed cost absorption will support margin recovery. Our priorities remain threefold: First, scale growth engines, sustain RAC share gains while ramping up washing machine, including front load at EMPPL and small domestic appliances, which remain our fastest-growing and most margin-accretive category. Second, deepen strategic partnership, position EPACK as preferred manufacturing partner across multiple categories with our with our key customers. Third, build the margin, convert scale into operating leverage as new facilities absorb volume. Localization deepens our value and addition, and mix moves towards higher-margin categories. We have a robust pipeline of new products and customers across segments, and our near-term priority is clear, converting record sales into stronger profitability. With this, we now open the floor for Q&A.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: First question comes from the line of Tanay from DAM Capital. Please go ahead.
Tanay (DAM Capital): Yeah. Hi, sir. Good morning, and thank you for the opportunity. I have a few questions, if I may. So, the first one, I want to understand is that, yes, we've seen very strong top line growth this quarter for RAC on a favorable base. Maybe if you can sort of help us break it down into value and volume?
Ajay DD Singhania (EPACK Durable Ltd): Volume wise.
Tanay (DAM Capital): Yes, for the quarter.
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