Orient Electric Limited Q3 FY26 Earnings Call Summary

Summary

Orient Electric Limited - Q3 FY26 Earnings Call Summary Thursday, January 22, 2026 04:30 PM (IST)

Event Participants

Executives 3 Arvind Vats (CFO), Ravindra Singh Negi (MD and CEO), Sambhav Jain (Head, Investor Relations)

Analysts 8 Aniruddha Joshi (ICICI Securities), Balasubramanian (Arihant Capital), Dhruv Jain (Ambit Capital), Disha (Sapphire Capital), Keshav Garg (CCIPL), Nattasha Jain (PhillipCapital), Nirransh Jain (BNP Paribas), Ravi Swaminathan (Avendus Park), Rachna (SiMPL), Umang Shah (Avendus)

Financials & KPIs

Geographic & Segment Commentary

• ECD Performance: Segment grew 12.6% YoY, significantly outperforming the industry in a muted cooling period due to strong heating category sales. Water heaters and room heaters saw high double-digit growth supported by the “Whirlflow” range and “Fatt se Garam” campaign. Fans delivered single-digit growth but outperformed peers, with the BLDC portfolio growing over 30%.
• Lighting & Switchgear: Recorded 7.1% YoY revenue growth with consumer lighting shifting toward Luminaires (66% mix vs 61% last year). Wires revenue doubled YoY off a small base, while Switches posted high double-digit growth through electrician engagement. B2B lighting remains a focus area to move from the current 75/25 B2C/B2B split toward a 65/35 target.
• International Business: Exports grew by 40% YoY, primarily led by strong fan sales in SAARC, Middle East, and Africa. These regions remain unaffected by the tariff issues impacting other global markets.

Company-Specific & Strategic Commentary

• Premiumization & BLDC: Premium decorative and BLDC fans now contribute 30%+ of the domestic mix, with a long-term target of 45%. Management views the new BEE Star norms (Jan 2026) as a catalyst for BLDC adoption, where Orient holds a technology-design lead.
• Distribution & DTM: Expanded the “Mission Orange” retail program to 4,500 new outlets and successfully stabilized the Pune market under the Direct-to-Market (DTM) model. The company utilizes a hybrid MD/DTM strategy to improve numeric distribution and retailer engagement.
• Operational Efficiency (Sanchay): The Sanchay cost-savings program has saved ₹43 crores YTD, helping maintain EBITDA margins at 7.5% despite commodity headwinds.
• Service Infrastructure: Implemented a 4-hour service commitment for fans and water heaters across 18 major cities to differentiate on consumer experience.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Fans Industry & BEE Norms

• Question: How will the BEE norm change impact the shift to BLDC? (Aniruddha Joshi)
• Answer: Ratcheting norms increase service value requirements; while 5-star is possible on induction, BLDC is much more efficient. This makes the tech-design combination of BLDC more attractive for consumers (Ravindra Singh Negi).
• Question: Did Orient gain market share in fans? (Ravi Swaminathan)
• Answer: Yes, while the industry saw TPW (Table, Pedestal, Wall) segment declines, Orient’s volumes were resilient, gaining share across channels and regions per third-party data (Ravindra Singh Negi).

Margins & Pricing

• Question: Was the 3% price hike enough to cover costs? (Ravindra Singh Negi)
• Answer: Price increases were taken in January across Fans, Lighting, and Switchgear. Wires prices are adjusted every 3 weeks. We will revisit another hike if copper doesn’t soften by February (Ravindra Singh Negi).
• Question: When will the Hyderabad plant improve margins? (Dhruv Jain)
• Answer: Utilization is currently low as it primarily produces TPW fans, which were hit by poor summers. Expected to leverage this fully starting Feb 2026 (Ravindra Singh Negi).

Segment Strategy

• Question: What is the growth trajectory for Wires and Switchgear? (Rachna)
• Answer: Currently less than 15% of total revenue. synergy is strong as 40-45% of fan dealers also sell wires. We aim for high double-digit growth here (Ravindra Singh Negi).

Key Takeaway

Orient Electric delivered a resilient Q3 FY26 with 11% YoY revenue growth to ₹906.5 crores, successfully navigating a difficult regulatory transition in the fan industry. The performance was anchored by the ECD segment (+12.6%), where the company capitalized on a severe winter to drive high double-digit growth in heating appliances. Strategically, Orient continues to push its premiumization playbook, with BLDC and decorative fans now exceeding 30% of the domestic mix and exports growing a robust 40%. While gross margins (29.8%) were compressed by elevated copper prices, management maintained a 7.5% EBITDA margin through the Sanchay cost-savings initiative and realized ₹43 crores in YTD savings. Looking forward, the company has implemented 3-3.5% price hikes in January to recover margins and remains optimistic that the early Holi and anticipated strong summer will drive a recovery in cooling categories. Management maintains a medium-term target of 10% operating margins driven by volume growth and an increasing mix of premium products.