EPACK Durable IPO: 10 things to know before subscribing to Rs 640-crore issue

EPACK Durable plans to raise Rs 640.05 crore via IPO

EPACK Durable’s Rs 640.05-crore IPO will open for subscription on January 19. The offer consists of a fresh issue of 1.73 crore shares and an offer-for-sale of one crore shares.

Here are 10 key things to know before subscribing to the offer:

The IPO will open for subscription on January 19 and close on January 23, 2024.

The price band for the issue has been fixed at Rs 218-230 per share.

EPACK Durable plans to raise Rs 640.05 crore via the IPO. The public offer consists of a fresh issue of 1.73 crore shares worth Rs 400 crore and an OFS of 1.04 crore shares worth Rs 240.05 crore. The anchor book will open for a day on January 18.

Also Read: Epack Durable IPO: Company sets price band at Rs 218-230 per share, to raise Rs 640 crore

EPACK Durable plans to use the net proceeds to fund capital expenditure requirements for setting up manufacturing capacities in Bhiwadi, Rajasthan and Sri City, Andhra Pradesh. Further, funds will be utilized to purchase equipment for the Bhiwadi manufacturing facility and repayment or prepayment of certain outstanding loans of the company. The remaining funds will be used for general corporate purposes.

Investors can bid for a minimum of 65 equity shares and multiples of 65 after that. Hence, the minimum investment by retail investors would be Rs 14,170 (65 (Lot size) x 218 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,950.

EPACK Durable is an original design manufacturer (ODM) of room air conditioners (RAC). The company also manufactures components such as sheet metal parts, injection moulded parts, cross-flow fans, and PCBA components that are actively used in the production of RACs.

The Bothra and Singhania-promoted company recorded healthy financial performance in the past years but there was pressure on the operating margin due to higher input costs. Net profit grew by 83.4 percent on-year to Rs 32 crore for the in FY23, and revenue from operations during the same period increased by 66.5 percent to Rs 1,539 crore.

EBITDA (earnings before interest, tax, depreciation and amortisation) in the last financial year came in at Rs 102.5 crore, increasing by 49 percent compared to the previous fiscal year. However, the margin dropped 78 bps to 6.66 percent in the same period.

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The book-running lead managers of the IPO are Axis Capital, Dam Capital Advisors and ICICI Securities while Kfin Technologies is the registrar. The company's promoters are Bajrang Bothra, Laxmi Pat Bothra, Sanjay Singhania and Ajay DD Singhania.

(i) Most of the revenue is derived from the top five customers. Contribution by the top five customers as a percentage of total revenue from operations increased from 76.82 percent in FY22 to 82.66 percent in FY23.

(ii) As of September 30, 2023, the company had a total outstanding indebtedness of Rs 3,69.57 crore.

(iii) The company imports some of the raw materials from China and any restriction whether from the state or central government may adversely affect the business. As of September 30, 2023, the cost of materials imported as a percentage of the total cost of materials purchased stood at 39.87 percent.

The basis of allotment will be finalised by January 24, shares will be credited to demat accounts by January 25 and the stock will be listed on the NSE and BSE on January 29, as per the RHP.