Rationale

 The ratings action for Epack Prefab Technologies Limited (EPTL) factors in its CAGR of ~56% in revenues in the last four years and ICRA’s expectation of continued healthy revenue and earnings profile in the medium term. ICRA expects that the company’s revenue and earnings will be supported by the strong order inflow in the prefabricated structure (prefab) division and steady demand in the expanded polystyrene (EPS) division. EPTL has healthy orders in hand worth ~Rs. 708 crore as on December 31, 2024, in the prefab division, with repeat orders of 35-40%, one of the key drivers for strong revenue growth over the years. The ratings also note the private equity investment of ~Rs. 130 crore, received from GEF Capital Partners in the current fiscal, which would primarily fund the capacity enhancement and working capital requirement in the prefab division. The company’s financial profile has improved steadily over the years, mainly led by increase in earnings. ICRA expects the debt protection metrics to improve further on account of increasing earnings and limited debt addition in the medium term. The ratings continue to factor in the company’s long track record of supplying EPS to a leading consumer durable manufacturer, LG Electronics India Limited (LG), among others. The ratings, however, continue to be constrained by the limited pricing flexibility owing to intense competition, especially in the prefab business, which is tender driven. The ratings also factor in the susceptibility of the company’s profitability to fluctuations in raw material prices. ICRA also notes that the company has recently added substantial capacities at its manufacturing facilities, which has been partially funded through debt, elevating the debt repayments over FY2025-FY2027. However, increasing internal accrual generation and existing surplus liquidity are expected to be more than adequate to fund the same. The Stable outlook on the long-term rating reflects ICRA’s opinion that growth in EPTL’s revenue and earnings will be supported by healthy demand outlook across both the business segments, along with growing capacities and established position in the prefab division.