Orient Electric - Near-Term Challenges Persists; Long-Term Growth Potential Intact: ICICI Securities

ICICI Securities Report

Orient Electric Ltd. is facing multiple transitory issues such as introduction of BEE norms in fans, steep volatility in raw material prices and restructuring of distribution network. We believe these issues will be largely over by H1 FY24.

With correction in input prices, Orient Electric will be able to recoup lost gross margins. Its gross margin has corrected ~500 basis points over FY20-23.

With a strong portfolio of premium fans, we model Orient Electric to gain market share in fans in medium term. We also expect the company to be the net beneficiary of distribution rejig and steady launches of new products.

We believe differentiated launches and distribution expansion may result in strong volume growth over FY23-25. We model Orient Electric to report revenue and profit after tax compound annual growth rates of 13.1% and 14.8% over FY22-25E.

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