Orient Electric Q1 Results Review - Soft, Inline; Hyderabad Plant To Aid Healthy Growth: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Report.Orient Electric Ltd. Q1 came soft and broadly inline. Revenue grew 7% YoY, led by switchgear and lighting, and summer product categories. Despite 249 basis points YoY expansion in gross margin (33.1%), Ebitda margin contracted 93 bps YoY to 5.3% due to higher employee costs and other expenses.Tight working capital cycle (10 days) stayed. TPW fans (20-25% mix) growth was muted due to capacity limitations. Focus on digital channel drove market share gains in ceiling fans. Exports were restrained due to geopolitical challenges in key markets (Africa). It took 3% price hike in April and June in fans to combat commodity price rise and regulatory changes.Business-to-consumer Lighting saw high teens volume growth; continued price erosion kept value growth low. Better product mix in Luminaries enhanced gross margins. B2C Lighting had consistent volume growth. DTM states revenue grew 23% YoY and contributed ~33% to total revenue.Most states grew in high doubledigits; Orient Electric aims to reach 16 states from 10 currently. Hyderabad plant has capacity to double revenue.We maintain earnings estimates and expect 12%/47% /59% compound annual growth rate in revenue/Ebitda/profit after tax over FY24-26E, after a muted 9%/0%/2% CAGR over FY19-24. Operational efficiency, cost savings (Rs 130 million; FY24: Rs 760 million) and end of McKinsey program could boost margins going forward.Maintain 'Hold' with a revised target price of Rs 285 (32 times FY26E price to earning, earlier Rs 268 at 30 times). Healthy uptick in revenue and margin is key for further re-rating in scrip’s valuation.Click on the attachment to read the full report:.Shoppers Ditch Juices For Wallet-Friendly Fizzy Drinks As Cola Wars Intensify.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Orient Electric Q1 Results Review - Soft, Inline; Hyderabad Plant To Aid Healthy Growth: Systematix

Operational efficiency, cost savings and end of McKinsey program could boost margins going forward, says the brokerage.

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Orient Electric Q1 Results Review - Soft, Inline; Hyderabad Plant To Aid Healthy Growth: Systematix

Operational efficiency, cost savings and end of McKinsey program could boost margins going forward, says the brokerage.

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