Target: ₹275

CMP: ₹239

Orient Electric’s Q4 revenue was broadly in-line, while margins surprised a bit positively as operating leverage kicked in, with company aiming to touch double-digits (vs 6.6 per cent in FY25) over the next 7-8 quarters.

ECD sales were modest in Q4 (fan sales up only in high single digits y-o-y) for an over-penetrated category like fans, while coolers gained from an early stocking up (+30 per cent). The focus remains on premiumisation (30 per cent of Q4 sales) with BLDC fan sales up 50 per cent y-o-y, contributing 20 per cent to ceiling-fan sales (mid-teens for the industry).

Lighting & Switchgear continued its industry-leading performance in FY25 (+11 per cent) on continued traction in B2B projects, double-digit volume growth in B2C (60 per cent premium mix; 200bp market-share gain) and 17 per cent y-o-y growth in switchgears & wires (30 per cent in Q4) with stable EBIT margin (14.3 per cent in FY25).

While ECD sales were hit by weaker pre-season channel filling due to a delayed summer, the firm remained optimistic of a pick-up in summer demand. While this needs to be monitored, we see a strong case for operating leverage as upfront investments have just started to pay off.

Factoring in Q4 results, we cut our FY26E EPS by 3 per cent and tweak FY27 EPS, leading to an unchanged TP. The stock trades at 31x FY27E P/E, implying limited downside potential, in our view.

Published on April 28, 2025