Q3 FY21 Result Update - Orient Electric - YES Securities

- Revenue and EBITDA beat estimates on strong ECD performance

- View - Stock trades at 35x FY23 EPS which is at discount to its peers like Havells and Crompton. Consistent delivery and outperformance will lead to multiple re-rating and EPS upgrades. We remain positive on the stock.

- Electrical consumer durables: Revenue grew 42% yoy, supported by the festive season and advance buying by Dealers due to anticipated price increase. Fans and Home appliances registered healthy growth, while coolers remained depressed. Speedier adoption of SFA (Sales force automation) and DMS (Distributor Management System) is helping acquire market visibility. The margin for the segment has grown substantially on the back of controlled costs and better leverage of expenses. ECD margins stood at 14.9% expansion of 249bps yoy.

- Lighting and switchgears: Consumer lighting saw mid-teens growth, while tender business saw substantial reduction on high base resulting in overall decline for lighting. The company has successfully entered into the Façade Lighting category and completed the prestigious "Dobra Chanti Bridge" project in Uttarakhand, "ODISHA Vidhan Sabha" building at Bhubaneswar, amongst other projects completed during this quarter. Switchgear market is small and OEL focus is on select markets and penetration in such markets coupled with the B2B segment. Margins in this segment stood at 14.6% expansion of 138bps.

- Near-term outlook - We expect ECD and B2C to continue its growth momentum as channel filling for Fans largest component of ECD will start in Q4. B2B lighting is expected to improve as economy starts to gather pace. Margins are expected to remain strong on cost reduction measures.

Shares of Orient Electric Ltd was last trading in BSE at Rs.252.8 as compared to the previous close of Rs. 245.75. The total number of shares traded during the day was 29197 in over 873 trades.

The stock hit an intraday high of Rs. 258 and intraday low of 246.15. The net turnover during the day was Rs. 7364191.

Source : Equity Bulls

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