Hold Orient Electric: target of Rs 225: ICICI Securities

ICICI Securities's research report on Orient Electric

Seasonal challenges notwithstanding, Orient Electric posted strong Q1FY26 numbers with EBITDA margin expansion of 68bps and marginal revenue growth of 1.9% YoY. Orient’s emphasis on premiumisation and portfolio optimization persists, as it expands its footprint in high-growth categories. Takeaways: (1) Orient reported modest revenue growth (1.9% YoY) led by its lighting segment (+6.7% YoY). (2) ECD segment’s growth was flat YoY amid competitive pricing pressure. In ECD, fans saw muted growth, coolers’ sales tumbled 40% YoY while water heaters reported double-digit growth. (3) The company’s cost-saving strategy enabled it to save INR 90mn in Q1FY26, which bodes well in the long run. (4) In-house PCB production and backward integration of BLDC motors have enhanced quality and design of the products. (5) Orient has added ~1,800 retailers under its DTM network.

Outlook

We cut our FY26–27 earnings estimate by 5.9–7.2%, factoring in Q1FY26 results, the impact of high inventory at the company and channel levels. Retain HOLD with a DCF-based revised TP of INR 225 (implied target P/E at 34x FY27E EPS; earlier TP: INR 235).