Epack Durables Shares Tumble Over 10% After Q2 Net Loss Widens

Shares of Epack Durables Ltd. experienced a significant decline, dropping over 10% on Thursday. This sharp fall was triggered by the company's financial results for the September quarter, which revealed a widening net loss. The net loss for the quarter increased to ₹8.5 crore from ₹6.1 crore in the same period last year. Although the company saw a substantial rise in other income to ₹4.7 crore from ₹70 lakh, it was not enough to offset the increased operational costs. Revenue for the quarter more than doubled, reaching ₹377 crore from ₹178 crore year-on-year. However, this revenue growth was outpaced by higher total expenses. The company's profitability also faced pressure as its gross margin narrowed by 210 basis points to 14.6% from 16.7% compared to the previous year. This contraction in gross margin is attributed to changes in the inventory mix.

Looking ahead, Epack Durables announced significant investment plans. It will invest $30 million in the initial phase of a new manufacturing facility in Sricity, Andhra Pradesh. The subsequent phase will focus on producing washing machines and refrigerators. Management is optimistic, projecting an additional revenue of $1 billion over the next five years from these expansions. The company has also approved the formation of a wholly-owned subsidiary, Epack Manufacturing Technologies Pvt. Ltd.

Impact: The immediate impact on the stock has been negative, with shares trading down significantly. However, the long-term outlook might be influenced by the successful execution of its expansion plans and the projected revenue growth. Investors will be closely watching the company's ability to control costs and improve margins in the coming quarters. Rating: 5/10

Difficult Terms: * Net Loss: The amount by which a company's total expenses exceed its total revenue over a specific period, indicating a financial deficit. * Other Income: Revenue generated from sources outside of a company's primary business operations, such as interest on investments or sale of assets. * Revenue: The total income generated by a company from its core business activities, typically from the sale of goods or services. * Total Expenses: The sum of all costs incurred by a company during a particular period, including operating costs, interest, and taxes. * Gross Margin: The profit a company earns after deducting the direct costs of producing and selling its goods or services. It is calculated as (Revenue - Cost of Goods Sold) / Revenue. * Basis Points: A unit of measure used in finance to denote a percentage change. One basis point is equal to 0.01% (1/100th of a percent). * Inventory Mix: The composition and variety of goods that a company holds in stock at any given time. * Wholly-Owned Subsidiary: A company controlled by another company that owns 100% of its outstanding shares.