Orient Electric Ltd (BOM:541301) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus News
3 min read

In This Article:

  • Revenue: INR660 crores, 16.5% year-on-year growth for Q2.

  • Lighting and Switchgear Revenue: INR221 crores, 8% growth.

  • ECD Revenue: INR440 crores, 21% growth.

  • Gross Margin: Expanded by 240 bps to 32.4% of revenue.

  • EBITDA Margin: INR36 crores, 5.3% of revenue, 180 bps expansion year on year.

  • PBT: INR14 crores, 103% normative growth after adjustments.

  • Spark Sanchay Program Savings: INR36 crores for the first half of the financial year.

  • DTM States Growth in Fans: 35% growth for the quarter.

  • Premium Portfolio in Fans: 30% of revenue, aiming for 40%-45%.

  • Service Coverage: 19,000+ PIN codes, 80% complaints resolved within 24 hours.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Orient Electric Ltd (BOM:541301) reported a 16.5% year-on-year growth in revenue for Q2 FY25, reaching INR660 crores.

  • The company's gross margin expanded by 240 basis points year-on-year to 32.4% of revenue, indicating successful cost optimization and premiumization efforts.

  • The lighting and switchgear segment achieved an 8% growth, while the ECD segment registered a robust 21% growth.

  • The Spark Sanchay program delivered INR36 crores in cost savings for the first half of the financial year, supporting margin improvements.

  • The company's digital and retail channels delivered high-double-digit growth, driven by water heaters and small appliances.

Negative Points

  • The first half of Q2 experienced a slow start due to subdued regional festivals and commodity price fluctuations impacting margins.

  • Switchgear and house wires experienced muted growth due to commodity fluctuations and pricing pressure.

  • The export market for TPW fans is highly competitive, with pricing pressures from Chinese competitors affecting margins.

  • The company faces ongoing pricing erosion in the lighting segment due to competitive pressures from regional players.

  • EBITDA margin for the quarter was 5.3%, which is lower than historical levels, indicating room for improvement in operating leverage.

Q & A Highlights

Q: Can you provide an update on the export orders for switchgears in Europe and the TPW export from your Hyderabad plant? A: We have been exporting switchgears to Europe and recently sent new products to Ukraine, awaiting feedback. TPW exports constitute about 20% of our fan exports. The Hyderabad plant is stabilizing and will soon be used for exports.

Q: Is export a higher-margin business for Switchgears and TPW fans? A: TPW exports face competitive pricing, especially from China, so margins are not higher. Switchgear exports offer reasonable margins but are not significantly higher than domestic sales.

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