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ICICI Securities Report
Orient Electric Ltd. faced multiple extraordinary events such as regulatory changes in fans, steep inflation and distribution restructuring in FY23. It led to 340 basis points Ebitda margin contraction and 40% profit after tax decline in FY23 YoY.
We believe most of these issues are behind now and Orient Electric is likely to report strong performance across segments in FY24-25. We remain enthused by its Q1 FY24 performance with strong revenue growth across segments (fans: 16%, water heaters 23%, small appliances 32% and business-to-business lighting 40% YoY).
We model Orient Electric's Ebitda margin to recover to 8.4% in FY24 from 6% in FY23 due to normalisation of business activities and commodity deflation.
We maintain 'Add' rating with discounted cash flow-based unchanged target price of Rs 245 (implied price/earning of 33 times FY25E).
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