EPACK Durable Limited is the second largest room air conditioner original design manufacturer ('ODM') in India in terms of number of units (indoor units + outdoor units) manufactured in Fiscal 2023 through the ODM route. They are a customer-centric business driven by a focus on continuing innovation and operational efficiency. Since 2003, they have been on a journey of evolution, where they initially started as an OEM for RAC brands. Driven by the focus on product development and innovation, they evolved into an ODM partner for RACs for the customers. They also identified the opportunity to increase the value addition in the offerings to customers, and accordingly, started manufacturing of various components such as sheet metal, injection moulded, cross flow fans and PCBA components which are actively used in the manufacturing of RACs. In parallel, they capitalised on the existing manufacturing infrastructure to strategically expand the operations in the small domestic appliances (“SDA”) market, particularly considering the seasonality of the demand for RACs, and currently design and manufacture induction cooktops, mixer-grinders, and water dispensers. This evidences the continued focus on the backward integration of the operations and diversification of the revenue streams. They commenced the operations with a single manufacturing unit in Dehradun, Uttarakhand in 2003, and have since expanded the manufacturing operations with Dehradun Unit II, Dehradun Unit III and Dehradun Unit IV, the Bhiwadi Manufacturing Facility and Sri City Manufacturing Facility. The Dehradun Manufacturing Facility and Bhiwadi Manufacturing Facility have an aggregate installed annual manufacturing capacity as on March 31, 2023 to manufacture (i) 0.90 million IDUs, 0.66 million ODUs, 0.36 million ODU Kits and 0.42 million WACs, and (ii) 0.11 million water dispensers, 1.2 million induction cooktops and 0.30 million mixer grinders, and components thereof. They also commenced operations at the Sri City Manufacturing Facility in December 2023. The annual manufacturing capacity of the Sri City Manufacturing Facility as on December 15, 2023, is (i) 0.66 million IDUs and 0.66 million ODUs, and (ii) 0.65 million induction cooktops, and components thereof. For details of the manufacturing capacity and capacity utilisation of the Dehradun Manufacturing Facility and Bhiwadi Manufacturing Facility in the last three Fiscals. In the six months ended September 30, 2023 and Fiscals 2023, 2022 and 2021, the top five customers contributed to Rs 4,894.86 million, Rs 12,720.25 million, Rs 7,099.85 million and Rs 5,243.56 million, amounting to 79.62%, 82.66%, 76.82% and 71.22% of the revenue from operations, respectively. The customers include four of the top six RAC brands in the Indian market. As per financial performance, EPACK Durable Limited has posted total income / net profits of Rs 739.65 Cr / Rs 7.80 Cr (FY21), Rs 927.34 Cr / Rs 17.43 Cr (FY22), Rs 1,540.25 Cr / Rs 31.97 Cr (FY23) and Rs 616.32 Cr / Rs 2.65 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 3.75 and average RoNW of 15.43% for last three fiscals. Issue is priced at a P/BV of 3.77 as per NAV of 61 as on 30.09.23. If we attribute latest earnings of FY22, FY23, and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 126.38, 68.92 and 415.10 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 122 IPOs in last three fiscals. Axis Capital Limited : This is 50th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. ( As on 16.01.2024 ) DAM Capital Advisors Limited : This is 19th IPO from this BRLM. From last 10 IPOs, three opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. ( As on 16.01.2024 ) ICICI Securities Limited : This is 56th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 16.01.2024 ) As per financials, EPACK Durable Limited has shown good growth, RoNW is 14.68% and P/E is respectively 126.38, 68.92 and 415.10 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is original design manufacturer of room air conditioner (RAC) and small domestic appliances (SDA). The sector is expected to provide good growth in future. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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