Accumulate Orient Electric; target of Rs 426: Arihant Capital

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26 Aug, 2025 12:21

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Arihant Capital's research report on Orient Electric

Orient Electric reported revenue growth of 37% YoY/41% QoQ to INR 594 cr led by good topline growth in both ECD (Electrical consumer durables) as well as Lighting & Switchgear (L&S) business. Due to surge in commodity prices, gross margin of the company decreased by 477 bps YoY at 28.5%. However, on a sequential basis it has increased by 117bps. EBITDA for the quarter increased by 7% YoY to INR 62 cr. High gross margin pressure has resulted EBITDA margin contraction of 290bps YoY at 10.4%. On QoQ basis, EBITDA margin increased by 512bps supported by operating leverage. Profit for the quarter grew by 7% YoY to INR 35 cr. ECD segment has recorded revenue growth of 38% YoY/30% QoQ to INR 420 cr. Strong growth momentum in ECD business was led by premium, economy, and portable fans. In ECD segment, growth was 50% by value and 50% by volume. L&S business revenue of the company increased by 35% YoY/78% QoQ to INR 175 cr. EBIT margin in this business increased by 136bps YoY. Working capital of the company remained elevated due to built-up of Inventory from the past 2 quarters, to meet the future pent up demand and in anticipation of any supply disruption arising due to third wave. Working capital is expected to reduce gradually over the next two quarter.

Outlook

We maintain our Accumulate rating on the stock with a revised target price of INR 426 (earlier INR 367), based on 40x FY24E P/E.

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