EPACK Durable shares list at discount; fall 8% post debut

Shares of EPACK Durable made a weak debut on the stock exchanges on Tuesday, tracking subdued trading in the broader market. Shares of room air conditioners manufacturer listed at ₹221 on the NSE, down 3.9% against the IPO price of ₹230 apiece. On the BSE, the stock opened slightly higher at ₹225, a discount of 2.2% over the issue price.

Post listing, EPACK Durable shares declined as much as 8.2% to hit a low of ₹211.2 on the BSE and NSE, while the market capitalisation slipped to ₹2,045 crore.

The listing of Epack Durable, the second largest original design manufacturer of room air conditioners in India, was below expectations as the stock was commanding a grey market premium (GMP) of ₹5 in the unofficial market, indicating listing price to be around ₹235.  

The ₹640 crore IPO of EPACK Durable, having a price band of ₹218-230 per share, was subscribed 16.37 times, thanks mainly to high net worth individuals and qualified institutional buyers (QIBs). The public issue was subscribed 25.59 times in QIB category, 29.07 times in the non-institutional investors (NII), and 6.50 times in the retail segment. The company had reserved half of the issue for QIB, up to 15% for NII, and the remaining 35% for retail investors.

The issue, which opened between January 19-24, was booked 0.8 times on day 1, followed by 3.8 times on day 2, and 16.79 times on final day. The lot size of the IPO was 65 equity shares and in multiples thereof.

The IPO of the Uttar Pradesh-based company comprised a fresh issue of equity shares worth ₹400 crore and an offer for sale (OFS) of 1.04 crore equity shares by the existing shareholders. Out of ₹400 crore raised from fresh equity capital, ₹230 crore will be used to expand manufacturing facilities, ₹80 crore for repaying debts, and the remaining for general corporate purposes.

A day ahead of the opening of the IPO, EPACK Durable raised ₹192.01 crore by allocating 83.48 lakh equity shares at ₹230 apiece.  The anchor book saw participation from marquee investors such as Society Generale, Copthall, Universal Sompo, Reliance General Insurance, SBI General Insurance, HDFC Life Insurance, SBI Life Insurance, Aditya Birla Sun Life Insurance, and others.

Established in 2019, EPACK Durable is an original design manufacturer (ODM) of room air conditioners (RAC). The company counts Blue Star, Daikin Airconditioning India, Voltas, Havells India, Haier Appliances (India), Bajaj Electricals as its key customers. The company posted 83.4% year-on-year growth in net profit to ₹32 crore in FY23, while revenue from operations rose 66.5% YoY to ₹1,539 crore. EBITDA (earnings before interest, tax, depreciation and amortisation) stood at ₹102.5 crore in FY23, up 49% as compared to the previous fiscal year. However, the margin dropped 78 basis points to 6.66%, dented by higher input costs.

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