Epack Durables IPO opens. Should you subscribe to this issue?

SECTIONSEpack Durables IPO opens. Should you subscribe to this issue?By Akash Podishetti, ETMarkets.comLast Updated: Jan 19, 2024, 09:57:00 AM ISTRate StoryFollow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePrintCommentSynopsis

Epack Durables IPO opens for subscription today, with a price band of Rs 218-230 per share. The issue includes a fresh equity issue of Rs 400 crore and an offer for sale (OFS) of 1.04 crore shares. Through the IPO, the company plans to raise around Rs 640 crore. The company is the second-largest room air conditioner original design manufacturer (ODM) in India. Its current product portfolio comprises room air conditioners, small domestic appliances, and components. The fresh proceeds will be used to fund capital expansion plans and repay outstanding debt.

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The initial public offer (IPO) of Epack Durables opened for subscription today. The issue, which closes on January 23, includes a fresh equity issue of Rs 400 crore and an offer for sale (OFS) of 1.04 crore shares.

Through the offer, the company plans to raise around Rs 640 crore.

Epack Durable is the second-largest room air conditioner original design manufacturer (ODM) in India in terms of the number of units in FY23.

Its current product portfolio comprises room air conditioners where it designs and manufactures complete RACs, small domestic appliances and components.

Also Read | Ahead of IPO, Epack Durables raises Rs 192 crore from marquee investors in anchor round

The company boasts long-standing relationships with top customers, leverages advanced vertically integrated manufacturing and possesses robust product development capabilities.

Fresh proceeds from the IPO will be used to fund capital expansion plans and repay part of its outstanding debt.

Epack Durables IPO review

Analysts believe the company prioritizes continuous product portfolio expansion, which also shows in its consistent financial performance.

"At the upper band, the issue is valued at an EV/EBITDA of 20.2x based on FY23 EBITDA and PE of 51.4x based on FY23 EPS of Rs 4.5. We are recommending Subscribe for Long Term for this issue," said Arihant Capital.

"We believe that sectoral tailwinds such as increasing global temperatures, higher consumer purchasing power and spending, favourable government policies, increased urbanization, and increased domestic consumption of RACs would benefit the company in the long term," said BP Equities, while recommending a subscription to the IPO.

Also Read | Epack Durables IPO: What GMP signals

Epack Durables IPO price band

The company has fixed a price band of Rs 218-230 per share, where investors can bid for 65 shares in one lot. About 50% of the offer is reserved for qualified institutional buyers (QIBs), 35% for retail investors and 15% for non-institutional investors.

Epack Durables Financials

The company’s revenue, EBITDA and PAT grew at a CAGR of 44.6%, 56.2% and 102.5%, respectively during FY21-23 period.

For the six months ended September 2023, the company reported revenue of Rs 615 crore, while net profit stood at Rs 2.6 crore. In FY23, the company's revenue from operations rose 66% year-on-year to Rs 1,539 crore and profit jumped 88% to Rs 32 crore.

Axis Capital, DAM Capital Advisors, and ICICI Securities are the book-running lead managers to the issue.

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