The stock has been in freefall, trading at ₹262.00 as of January 21, 2026—down 47.79% over the past year and 51.25% below its 52-week high of ₹537.40. The market has clearly lost confidence in the company's ability to convert topline growth into sustainable bottom-line expansion, with the shares underperforming the Sensex by a staggering 55.88 percentage points over the last twelve months. The technical picture remains firmly bearish, with the stock trading below all key moving averages and showing no signs of stabilisation.
Despite the sequential revenue recovery, the quarter exposed fundamental weaknesses in Epack Durable's business model. The company's profit after tax margin compressed to a wafer-thin 0.61% in Q3 FY26 from 3.46% in the previous quarter, whilst interest expenses surged and other income constituted an alarming 54.96% of profit before tax—a clear red flag regarding the quality of earnings. With the company carrying a proprietary advisory rating of STRONG SELL (score: 14/100) and classified as "below average" in quality assessment, investors face a challenging investment case that demands careful scrutiny.
Financial Performance: Revenue Recovery Masks Profitability Crisis
Epack Durable's Q3 FY26 results present a tale of two narratives: robust topline recovery overshadowed by a catastrophic collapse in profitability. Net sales surged 100.58% quarter-on-quarter to ₹427.75 crores, rebounding sharply from the seasonally weak Q2 FY26 figure of ₹213.26 crores. However, this topline expansion failed to translate into meaningful bottom-line growth, with consolidated net profit declining 111.64% QoQ to ₹2.59 crores from a loss of ₹22.25 crores in the previous quarter. On a year-on-year basis, revenue grew a modest 13.51% whilst net profit increased just 3.19%—a clear indication of deteriorating operating leverage.
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 427.75 | +100.58% | 2.59 | -111.64% | 0.61% |
| Sep'25 | 213.26 | -67.80% | -22.25 | -197.20% | -10.43% |
| Jun'25 | 662.39 | +2.98% | 22.89 | -39.32% | 3.46% |
| Mar'25 | 643.25 | +70.70% | 37.72 | +1402.79% | 5.86% |
| Dec'24 | 376.84 | -0.07% | 2.51 | -129.56% | 0.67% |
| Sep'24 | 377.10 | -51.26% | -8.49 | -136.27% | -2.25% |
| Jun'24 | 773.68 | — | 23.41 | — | 3.03% |
The margin profile reveals the extent of the operational challenges. Operating profit margin (excluding other income) improved to 7.41% in Q3 FY26 from a dismal 0.25% in Q2, but this remains well below the 11.21% achieved in Q4 FY25. More concerning is the gross profit margin of 4.90% and PAT margin of just 0.61%—both indicative of intense competitive pressures and poor cost management. The company's operating profit before depreciation, interest, and tax (excluding other income) stood at ₹31.69 crores, down 73.60% from the previous four-quarter average, highlighting structural profitability issues.
Interest costs remain a significant drag on profitability, rising to ₹13.48 crores in Q3 FY26. On a nine-month basis, interest expenses surged 24.15% to ₹49.56 crores, reflecting the company's elevated debt burden and rising cost of capital. With an EBIT-to-interest coverage ratio averaging just 1.93x over recent periods, the company has limited financial flexibility to absorb further margin pressures or business disruptions. The tax rate of 48.61% in Q3 FY26—significantly higher than the normalised 27% range—further eroded net profitability, though this may reflect one-off adjustments rather than a structural shift.
Operational Challenges: Weak Returns and Deteriorating Capital Efficiency
Epack Durable's operational performance reveals fundamental weaknesses in capital allocation and business efficiency. The company's return on equity (ROE) stands at a meagre 4.27%, placing it amongst the weakest performers in the electronics and appliances sector. This anaemic ROE—well below the sector average of approximately 16%—indicates that the company is generating minimal returns for shareholders relative to the equity capital deployed. Similarly, the return on capital employed (ROCE) of 6.14% reflects poor utilisation of total capital, with the company struggling to generate adequate operating profits from its asset base.
⚠️ Critical Profitability Concerns
Weak Capital Efficiency: ROE of 4.27% and ROCE of 6.14% rank amongst the lowest in the peer group, indicating poor capital allocation and operational inefficiency. The company is failing to generate adequate returns on invested capital, raising questions about the sustainability of its business model.
Earnings Quality Red Flag: Other income constituted 54.96% of profit before tax in Q3 FY26, suggesting that core operating profits are insufficient to support reported earnings. This heavy reliance on non-operating income is a significant quality concern.
Interest Coverage Strain: With EBIT-to-interest coverage averaging just 1.93x and interest expenses growing 24.15% on a nine-month basis, the company has limited financial cushion to absorb further margin pressures or business headwinds.
The balance sheet presents a mixed picture. Total shareholder funds stood at ₹951.84 crores as of March 2025, with long-term debt of ₹61.76 crores and a net debt-to-equity ratio of 0.71. Whilst the leverage metrics appear moderate, the company's weak profitability and cash generation raise concerns about its ability to service debt obligations comfortably. Cash flow from operations turned sharply negative in FY25, falling to ₹31.00 crores from ₹256.00 crores in the previous year, driven by adverse working capital movements of ₹118.00 crores. This deterioration in operating cash flow, coupled with elevated capital expenditure of ₹94.00 crores, resulted in a net cash outflow of ₹92.00 crores during the year.
The company's sales-to-capital-employed ratio of 1.25x suggests that it requires significant capital investment to generate each rupee of revenue—an inefficient capital structure that limits profitability potential. With fixed assets of ₹546.22 crores representing a substantial portion of the balance sheet, the company must achieve higher asset turnover and margin expansion to justify these capital investments. However, the current trajectory suggests that operational improvements remain elusive, with the company struggling to translate revenue growth into sustainable profit expansion.
Sector Dynamics: Underperformance in a Challenging Environment
The electronics and appliances sector has faced headwinds over the past year, with the broader industry delivering a negative return of 11.73%. However, Epack Durable's 47.79% decline over the same period represents a severe underperformance of 36.06 percentage points relative to its sector peers. This dramatic underperformance reflects company-specific challenges rather than broader industry trends, with investors clearly concerned about the company's deteriorating profitability and weak competitive positioning.
Market Context: Sector Underperformance
Epack Durable has significantly underperformed its sector peers, declining 47.79% over the past year compared to the electronics and appliances sector's 11.73% decline. The company's 36.06 percentage point underperformance reflects investor concerns about structural profitability issues, weak capital efficiency, and deteriorating financial trends. With the stock trading 51.25% below its 52-week high and in a confirmed bearish technical trend, market sentiment remains decidedly negative.
The competitive landscape in the electronics and appliances manufacturing space remains intense, with established players enjoying economies of scale and stronger brand recognition. Epack Durable's weak operating margins and poor return metrics suggest it lacks the competitive advantages necessary to command pricing power or achieve superior profitability. The company's small-cap status (market capitalisation of ₹2,521.19 crores) further limits its ability to compete on scale with larger, better-capitalised peers.
Looking ahead, the sector faces challenges from volatile raw material costs, supply chain disruptions, and changing consumer preferences. For Epack Durable to regain investor confidence, it must demonstrate a clear path to margin improvement and sustainable profitability growth. However, the current financial trends point in the opposite direction, with deteriorating margins, elevated interest costs, and weak cash generation creating significant headwinds for the business.
Peer Comparison: Lagging on All Key Metrics
A comparison with sector peers highlights Epack Durable's inferior financial profile across multiple dimensions. The company's ROE of 4.27% ranks at the bottom of its peer group, significantly trailing competitors such as Hawkins Cookers (38.50%), Orient Electric (17.49%), and Bajaj Electricals (9.89%). This weak return on equity reflects fundamental operational inefficiencies and poor capital allocation, placing Epack Durable at a severe competitive disadvantage.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Epack Durable | 61.45 | 2.62 | 4.27% | 0.71 | NA |
| Hawkins Cookers | 35.51 | 10.82 | 38.50% | -0.35 | 1.71% |
| Orient Electric | 39.84 | 4.95 | 17.49% | 0.14 | 0.91% |
| Bajaj Electricals | 53.23 | 2.78 | 9.89% | -0.04 | 0.73% |
| IFB Industries | 43.92 | 6.04 | 7.29% | -0.18 | NA |
| Bosch Home Comfort | 91.64 | 7.75 | 4.69% | 0.34 | 2.65% |
Despite its weak fundamentals, Epack Durable trades at a P/E ratio of 61.45x—higher than quality peers such as Hawkins Cookers (35.51x) and Orient Electric (39.84x). This valuation premium appears unjustified given the company's inferior profitability and deteriorating financial trends. The price-to-book ratio of 2.62x, whilst lower than the peer average of approximately 6.50x, still appears elevated for a company generating such poor returns on equity. Investors are essentially paying 2.62 times book value for a business that generates just 4.27% return on that book value—an unattractive risk-reward proposition.
The peer comparison underscores a fundamental valuation disconnect. Quality companies like Hawkins Cookers justify their premium multiples through superior ROE (38.50%), consistent dividend payments (1.71% yield), and net cash positions (debt-to-equity of -0.35). In contrast, Epack Durable combines weak returns, no dividend, and moderate leverage—a profile that typically commands a significant valuation discount rather than a premium. This misalignment between fundamentals and valuation creates substantial downside risk for investors.
Valuation Analysis: Expensive Despite Weak Fundamentals
Epack Durable's current valuation appears disconnected from its underlying business performance. Trading at a P/E ratio of 61.45x trailing twelve-month earnings, the stock commands a significant premium to both its peer group average and broader market multiples. This elevated valuation is particularly concerning given the company's weak profitability metrics, deteriorating financial trends, and below-average quality assessment. The EV/EBITDA multiple of 21.10x and EV/EBIT multiple of 31.73x further confirm the expensive valuation, especially when considered against the company's anaemic return on capital employed of 6.14%.
The company's valuation grade has oscillated between "Expensive" and "Fair" over recent months, currently classified as "Expensive" since July 15, 2025. This assessment appears justified given the fundamental deterioration in financial performance. The stock has declined 51.25% from its 52-week high of ₹537.40, yet even at the current price of ₹262.00, valuation metrics remain stretched relative to earnings quality and growth prospects. With a PEG ratio of 1.04x based on five-year EBIT growth of 28.58%, the stock offers limited valuation comfort, particularly given the recent sharp deceleration in profitability growth.
The dividend picture provides no support for the valuation, with the company paying no dividends and maintaining a dividend payout ratio of 0.0%. This stands in stark contrast to quality peers like Hawkins Cookers (1.71% yield) and Bosch Home Comfort (2.65% yield), which return capital to shareholders whilst maintaining superior profitability. For income-focused investors, Epack Durable offers no yield cushion to offset the elevated valuation risk and deteriorating fundamentals.
Shareholding Pattern: Institutional Exodus and Promoter Stability
The shareholding pattern reveals a concerning trend of institutional divestment alongside stable but highly pledged promoter holdings. Promoter shareholding stood at 47.91% as of September 2025, declining marginally by 0.13 percentage points from the previous quarter. More concerning is the 7.59% pledge of promoter shares, which raises questions about promoter confidence and potential financial stress. Whilst the pledge level is not extreme, it represents a red flag that warrants monitoring, particularly in the context of deteriorating business performance.
| Quarter | Promoter | FII | Mutual Funds | Insurance | Other DII |
|---|---|---|---|---|---|
| Sep'25 | 47.91% | 1.48% | 3.16% | 1.56% | 1.19% |
| Jun'25 | 48.04% | 0.40% | 0.36% | 1.43% | 3.76% |
| Mar'25 | 48.04% | 1.58% | 0.36% | 1.57% | 4.64% |
| Dec'24 | 48.04% | 1.31% | 0.72% | 2.03% | 6.23% |
| Sep'24 | 48.06% | 1.97% | 0.72% | 1.97% | 7.89% |
The institutional shareholding pattern tells a troubling story. Mutual fund holdings surged to 3.16% in September 2025 from 0.36% in the previous quarter—a significant 2.80 percentage point increase. However, this appears to be an outlier rather than a vote of confidence, as mutual fund holdings had remained consistently low at 0.36% to 0.72% over the preceding quarters. More concerning is the dramatic decline in other domestic institutional investor (DII) holdings, which plummeted from 7.89% in September 2024 to just 1.19% in September 2025—a cumulative reduction of 6.70 percentage points over four quarters. This sustained institutional exit suggests that professional investors are losing confidence in the company's prospects.
Foreign institutional investor (FII) holdings have also shown volatility, increasing to 1.48% in September 2025 from 0.40% in June 2025, but remaining well below the 1.97% level seen in September 2024. With total institutional holdings at just 7.39%, the stock lacks the institutional support base that typically provides price stability and liquidity. The dominance of non-institutional investors at 44.69% suggests the stock is largely held by retail participants, increasing volatility risk and limiting access to long-term strategic capital.
Stock Performance: Severe Underperformance Across All Timeframes
Epack Durable's stock performance has been dismal across virtually all time horizons, with the shares generating significant negative alpha relative to the Sensex benchmark. Over the past year, the stock has plummeted 47.79% whilst the Sensex gained 8.09%—representing a catastrophic underperformance of 55.88 percentage points. This severe underperformance reflects the market's loss of confidence in the company's ability to deliver sustainable earnings growth and improve return metrics.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +0.29% | -0.25% | +0.54% |
| 1 Week | -3.05% | -1.69% | -1.36% |
| 1 Month | -9.01% | -3.48% | -5.53% |
| 3 Months | -23.18% | -2.91% | -20.27% |
| 6 Months | -26.55% | -0.28% | -26.27% |
| YTD | -7.09% | -3.81% | -3.28% |
| 1 Year | -47.79% | +8.09% | -55.88% |
The technical picture remains firmly bearish, with the stock in a confirmed downtrend since October 27, 2025. The shares are trading below all key moving averages—5-day (₹266.95), 20-day (₹275.46), 50-day (₹272.71), 100-day (₹315.97), and 200-day (₹341.19)—indicating sustained selling pressure and lack of buying support. The stock's beta of 1.35 classifies it as a high-beta security, meaning it exhibits greater volatility than the broader market. Combined with negative returns, this high volatility translates into a sharply negative risk-adjusted return of -1.03, placing the stock in the "high risk, low return" category.
The recent price action shows no signs of stabilisation. Over the past three months, the stock has declined 23.18% versus the Sensex's 2.91% decline—an underperformance of 20.27 percentage points. The six-month picture is equally dire, with the stock down 26.55% compared to the Sensex's marginal 0.28% decline. With immediate support at the 52-week low of ₹245.50 and multiple resistance levels overhead, the technical setup offers little encouragement for near-term price recovery.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
The investment case for Epack Durable is severely compromised by a confluence of negative factors spanning fundamentals, technicals, and valuation. The company's proprietary Mojo score of 14 out of 100 places it firmly in STRONG SELL territory, with the advisory recommending exit for existing holders and complete avoidance for fresh investors. This assessment is supported by deteriorating financial trends, a bearish technical setup, below-average quality metrics, and expensive valuation despite weak fundamentals.
The near-term drivers are decisively negative, with both quarterly financial trends and technical indicators pointing downward. The company's Q3 FY26 results exposed fundamental weaknesses in profitability, with operating profit (excluding other income) falling 73.60% below the four-quarter average and PAT margins compressing to just 0.61%. The heavy reliance on other income—which constituted 54.96% of profit before tax—raises serious questions about earnings quality and sustainability. On the technical front, the confirmed bearish trend, high-beta characteristics, and positioning below all moving averages suggest further downside risk.
The quality assessment paints an equally concerning picture. With an average ROE of 4.27% and ROCE of 6.14%, the company ranks amongst the weakest performers in its peer group in terms of capital efficiency. The EBIT-to-interest coverage of just 1.93x provides minimal financial cushion, whilst the debt-to-EBITDA ratio of 3.62 indicates moderate but meaningful leverage. The institutional holding of just 7.39% and promoter pledge of 7.59% add to the quality concerns, suggesting limited institutional confidence and potential promoter financial stress.
✅ KEY STRENGTHS
- Strong five-year sales CAGR of 33.30% demonstrates topline growth capability
- Operating margin recovery to 7.41% in Q3 from 0.25% in Q2 shows sequential improvement
- Moderate leverage with debt-to-equity of 0.71 provides some financial flexibility
- Diversified promoter base reduces single-promoter concentration risk
- Recent mutual fund interest with holdings increasing to 3.16% in September 2025
⚠️ KEY CONCERNS
- Extremely weak ROE of 4.27% and ROCE of 6.14% indicate poor capital efficiency
- PAT margin collapsed to 0.61% in Q3 FY26 from 3.46% in previous quarter
- Other income constitutes 54.96% of PBT, raising earnings quality concerns
- Interest coverage of 1.93x provides minimal financial cushion
- Sustained institutional exit with other DII holdings falling from 7.89% to 1.19%
- Stock down 47.79% over past year with 55.88 percentage points underperformance vs Sensex
- Expensive valuation at 61.45x P/E despite weak fundamentals
Outlook: What to Watch
The forward outlook for Epack Durable remains challenging, with multiple headwinds likely to persist in the near term. Investors should monitor several key factors that could either catalyse a turnaround or confirm further deterioration in business fundamentals.
POSITIVE CATALYSTS
- Sustained improvement in operating margins above 10% for multiple quarters
- Reduction in reliance on other income with core profitability improvement
- Meaningful reduction in interest costs and improvement in EBIT-to-interest coverage
- Increased institutional participation signalling confidence in turnaround
- Technical trend reversal with stock reclaiming 200-day moving average
RED FLAGS
- Further compression in PAT margins below 1% indicating structural profitability issues
- Continued institutional exit with DII and FII holdings declining further
- Increase in promoter pledging above 10% suggesting financial stress
- Negative operating cash flow persisting for multiple quarters
- Stock breaking below 52-week low of ₹245.50 on high volumes
- Interest coverage falling below 1.5x indicating debt servicing challenges
"With a toxic combination of weak capital efficiency, deteriorating profitability, expensive valuation, and bearish technicals, Epack Durable presents a high-risk proposition that investors would be well-advised to avoid."
The path to recovery appears steep and uncertain. For the company to regain investor confidence, it must demonstrate sustained margin improvement, reduced reliance on non-operating income, and meaningful enhancement in return metrics. However, the current trajectory suggests these improvements are not imminent, with Q3 FY26 results reinforcing concerns about the sustainability of the business model. The combination of elevated valuation, weak fundamentals, and negative technical momentum creates a challenging environment for existing shareholders and offers little attraction for prospective investors.
The Verdict: Exit Recommended
Score: 14/100
For Fresh Investors: Avoid completely. The stock presents a high-risk, low-return proposition with deteriorating fundamentals, expensive valuation, and bearish technical setup. Multiple superior alternatives exist in the electronics and appliances space with stronger profitability, better capital efficiency, and more attractive valuations.
For Existing Holders: Consider exiting positions to limit further downside. The combination of weak ROE (4.27%), collapsing margins (0.61% PAT margin), heavy reliance on other income (54.96% of PBT), and sustained institutional selling creates significant downside risk. The stock's 47.79% decline over the past year and positioning below all moving averages suggests further weakness ahead.
Fair Value Estimate: ₹195 (25.57% downside from current price of ₹262). Based on peer average P/E of 50x applied to normalised EPS, adjusted downward for below-average quality and negative financial trends.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
