/** blogpostTitle: EPACK Durable Q1 FY27: Record revenue, margin pressure, and the operating leverage test blogpostSlug: epack-q1 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra realistic corporate finance scene showing a clean executive dashboard on a laptop in a modern Indian office. The dashboard displays a large upward revenue bar for the latest quarter and a separate line chart showing EBITDA margin dipping year on year but recovering quarter on quarter. A secondary stacked bar shows segment mix with a dominant air conditioner portion and smaller blocks for SDA and LDA, components and others. Another panel shows a capex progress tracker toward a 470 crore programme. No logos or text labels. blogpostShortTitle: EPACK Durable Q1 FY27 revenue surge */

EPACK Durable Q1 FY27: Record revenue, margin pressure, and the operating leverage test

EPACK Durable started FY27 with its highest ever quarterly operating revenue, but profitability remained under pressure. For the quarter ended June 30, 2026 (Q1 FY27), operating revenue rose to INR 886 crore, up 33.8 percent year on year. EBITDA was INR 55 crore, up 0.7 percent, and EBITDA margin declined to 6.21 percent from 8.24 percent a year ago. Profit after tax fell to INR 11.8 crore, down 48.5 percent, as depreciation and finance costs increased and other income declined.

Management’s framing is straightforward. The company believes it is gaining share and expanding beyond room air conditioners, but near-term profitability is being dragged by input costs, foreign exchange volatility, and the fixed-cost load from recent capacity additions.

Segment growth stayed broad based, led by RAC and appliances

The quarter was seasonally strong for room air conditioners (RAC), and EPACK’s RAC segment expanded sharply. RAC revenue grew 43.8 percent year on year to INR 622.1 crore. Small and large domestic appliances (SDA and LDA) grew even faster, up 68.9 percent to INR 131.4 crore, supported by categories such as air fryers and washing machines.

Components revenue declined 23.1 percent to INR 85.3 crore, which management linked to a high base and seasonality, given that many components are tied to RAC. The Others segment grew 15.1 percent to INR 47.2 crore.

The company has repeatedly highlighted that Q1 can appear more RAC-heavy due to April to June being the peak period for room AC demand. In the investor deck, EPACK described the longer-term diversification trend through FY23 to FY26, with non-RAC contribution rising meaningfully on a full-year basis.

Why profits lagged the topline

Despite strong revenue growth, the cost structure tightened. Total expenses rose 36.7 percent year on year, faster than revenue. Cost of goods sold increased 36.3 percent, and other expenses increased 56.8 percent. On the concall, the CFO pointed to a foreign exchange loss of around INR 6 crore to INR 7 crore contributing to the spike in other expenses.

Below EBITDA, the drag was more visible. Depreciation rose 30.7 percent year on year to INR 16.6 crore, and finance cost rose 27.0 percent to INR 20.2 crore. The share of JV loss widened to INR 2.3 crore. Other income declined sharply to INR 1.7 crore from INR 5.7 crore.

A key year-on-year comparison point is PLI income. The presentation states that the company did not accrue any PLI income in Q1 FY27, while Q1 FY26 had accrued PLI income of INR 13.3 crore. Management also stated that FY27 is the last year of PLI eligibility for the company and that it is working to reverse the PLI discount passed on to customers by the end of the year.

Diversification and capacity absorption remain the strategic core

EPACK’s strategic narrative is built around reducing dependence on RAC, expanding into SDA and LDA, and deepening backward integration into components. The company reported 72 customers and 19 product categories in Q1 FY27. It also highlighted that top two customer concentration has reduced from 72 percent in FY23 to 38 percent in Q1 FY27.

On manufacturing, the company operates across five locations and has in-house capabilities for components such as heat exchangers, copper tubing, PCBAs, sheet metal and plastic moulding. This localization theme sits at the center of its capex programme.

The investor deck outlines a proposed strategic capital investment programme of INR 470 crore through end of Q2 FY27, with INR 297.1 crore spent in FY26 and INR 10.2 crore in Q1 FY27. Management linked the near-term increase in depreciation and interest costs to future operating leverage as utilization improves.

Utilization is a key variable investors will track. On the concall, management stated that in Q1 FY27 Dehradun and Bhiwadi utilization was close to 90 percent, and Sri City improved to around 50 percent, up from under 25 percent previously. For FY27, management said it is targeting average utilization across plants above 60 percent.

Hisense partnership adds a visible growth lever

The Hisense partnership is the most tangible example of EPACK’s strategic push toward deeper customer integration. Management stated that during Jan to Jun it delivered close to 60,000 air conditioners under the partnership, contributing around INR 120 crore of revenue in that period. In Q1 FY27 alone, management cited about 35,000 units and roughly INR 65 crore of revenue from this relationship.

Beyond RAC, management said front-load washing machine pilot production is targeted by the end of Q2, with production expected by end of October. This matters because EPACK has acknowledged that Q2 and Q3 have historically been weaker or loss-making due to AC seasonality. The company said it aims to reduce this seasonality over the next 4 to 6 quarters by scaling non-AC categories, with washing machines highlighted as a major lever.

What to watch from here

EPACK’s Q1 FY27 results show clear topline momentum and a fast scaling appliances business alongside RAC. But the quarter also underscores the current reality. EBITDA margin compressed, PAT declined sharply, and the cost base includes higher depreciation and finance costs from the company’s investment cycle. Inventory normalization and stable working capital will be important to keep finance costs in check.

The near-term question is whether higher utilization, a richer product mix, and the rollback of PLI-linked discounts can translate record scale into better profitability. Management has positioned operating leverage as the primary path back.