Orient Electric - Long Term Focus, Premiumisation Are Future Growth Levers: Nirmal Bang

Nirmal Bang Report

The focus of the management remains on long term performance, with premiumisation as the key theme. Current strategic decisions are expected to bear fruit from H2 FY26 onwards.

Ceiling fans line has been operationalised at the Hyderabad plant. It is expected to stabilize by the beginning of Q4 FY25.

Kitchen Appliance demand is currently slow – did not pick up as expected.

Lighting demand too did not pick up as expected (from August 2024), and therefore, the company had to offer additional schemes to push the product.

Orient Electric Ltd. is trying to lay more emphasis on channel financing / vendor financing to grow its market.

While its direct-to-market strategy is a step in the right direction, stiff competition and consequently, margin expansion in the near term, remains a challenge. We maintain Hold with a revised target price of Rs 280.

This implies a PE of 38 times on Sept’26E EPS and it is at ~35% discount to the five-year historical average PE multiple on a one- year forward basis.

The significant discount is on account of frequent senior management changes and consistent margin decline in the past couple of years.

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