Orient Electric (ORIENTELEC) Q2 22/23 earnings summary

Executive summary

• Q2 FY23 revenue fell 14.1% YoY to ₹510.6 crore; exceptional one-time factors, mainly in Fans, adversely affected overall growth by 11%.

• Management described the quarter as challenging but expected an optimistic H2, citing low channel inventory, festival demand and seasonal tailwinds.

Financial highlights

• Gross profit declined 20.8% YoY to ₹134.2 crore; gross margin fell 222 bps to 26.3%.

• EBITDA decreased 81.2% YoY to ₹11.6 crore; EBITDA margin fell 814 bps to 2.3%.

• PAT was a loss of ₹0.4 crore versus profit of ₹34.7 crore YoY; EPS was -₹0.01 versus ₹1.64.

• Employee expenses fell 11.8% YoY to ₹43.4 crore, while other expenses rose 35.7% to ₹79.2 crore.

Outlook and guidance

• Normalized EBITDA, excluding additional advertising, brand-building and consultancy investments, was estimated at ~6%, slightly above pre-COVID levels; EBITDA was expected to rebound in H2.

• Fan gross margins were targeted to recover by Q4 FY23 through higher pre-season production and cost-reduction initiatives.

• Direct distribution markets in UP and Karnataka were expected to return to growth by Q3 FY23, with AP and Telangana expected to accelerate in Q4.

• Project Spark “Sanchay” identified ₹68 crore of annualized cost-reduction opportunities in H1.