Accumulate Orient Electric; target of Rs 290: Dolat Capital Market

Dolat Capital Market's research report on Orient Electric

Q3 revenues, EBITDA and PAT grew by 25%, 86% and 173% YoY at Rs6.2bn, Rs842mn and Rs519mn respectively driven by strong growth in ECD. Cash balance on books remained healthy at Rs1.7bn compared to Rs842mn in Q2FY21 with healthy working capital management. Orient continued to grow under ECD segment with a growth of 42% in Q3 and higher margins by 250bps at 14.9%, though lighting declined 8% due to slowdown in B2B. Better ECD mix and focus on cost rationalization helped company to continue growth trajectory. Priority remains to shift towards optimum mix with 75% of revenues from ECD business vs 65%a year back; WC days have fallen to 18 days’ vs 60 days in FY20.

Outlook

We like the premiumisation story of Orient and value it at 46x Sep22E, at an Accumulate rating with a TP of Rs290.