Orient Electric - Cooler Weather Expected To Moderate Fans Sales: Nirmal Bang

Nirmal Bang Report

We recently interacted with the management of Orient Electric Ltd.

Despite primary sales of Fans picking up from November 2023 to mid-February 2024, unfavorable weather plus tepid consumer demand has led to slowdown in secondary sales. Channel partners have turned cautious and have reduced their inventory levels. They will replenish the same as and when necessary.

Channel de-stocking continues in the lighting segment due to continuous erosion. The B2C Lighting industry is expected to contract by at least 10% in FY24. Management expects stabilisation from H2 FY24.

We maintain Buy with a revised target price of Rs 230, valuing it at 30 times March-26E earnings per share.

The stock has seen a sharp correction lately and therefore entry at current market price offers a favorable risk-reward ratio. While DTM strategy is a step in the right direction, tepid B2C demand, any significant delay in the full commissioning of the Hyderabad plant and delay in on-boarding the new Managing Director and Chief Executive Officer remain key risks to the overall business strategy.

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