Buy EPACK Durable; target of Rs 575: LKP Research

LKP Research is bullish on EPACK Durable has recommended buy rating on the stock with a target price of Rs 575 in its research report dated December 02, 2024.

Broker Research

December 02, 2024 / 10:50 IST

Buy

LKP Research's research report on EPACK Durable

EPACK Durable (EPACK) the second-largest Room Air Conditioners (RAC) ODM manufacturer in India with a market share of ~24%, is rapidly gaining strength in the consumer durables market. The company produces a wide range of products, including RACs, small appliances, and components, with RACs making ~80% of its revenue. As India’s urban population grows and disposable incomes rise, the demand for RAC is expected to soar from ~11 mn units in FY24 to ~25 mn units by FY29E, at an impressive CAGR of 18%. EPACK is perfectly positioned to capture a significant share of this expanding market, working with India’s top RAC brands. Further, the company is also diversifying its product portfolio to maintain the utilization levels all year round starting with air coolers and now Air Fryers & Top-Load Washing Machine (~8% market penetration) are also in the pipeline. Other products within the small kitchen appliances portfolio are also in development stages.

Outlook

We expect our sales/EBITDA/PAT to growth at a CAGR of 31%/34%/ 55% over FY24 to FY27E. Currently trading at 29x on its projected earnings for the FY27E, EPACK presents an attractive investment opportunity considering its promising growth trajectory and positive outlook. We recommend a BUY rating with a target price of ₹575 valuing at 40x FY27E EPS.

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