Orient Electric rallies 9% on strong September quarter results

The company reported a nearly seven-fold jump in net profit at Rs 32.4 crore in Q2FY21.

Shares of Orient Electric rallied 9 per cent to Rs 221 on the BSE in the early morning deals on Thursday after the company reported a nearly seven-fold jump in its net profit at Rs 32.4 crore for the September quarter (Q2FY21), on the back of strong operational performance. The CK Birla Group company had posted a profit of Rs 4.8 crore in Q2FY20. It had posted a net loss of Rs 27.3 crore in the previous quarter (Q1FY21). However, revenue remained flat at Rs 434 crore during the quarter.

Ebitda (earnings before interest, taxes, depreciation, and amortisation) more than doubled over last year and expanded by 830 basis points to 13.3 per cent year-on-year (YoY) during the quarter.

The management said the gross margin expansion of 150 basis points and cost optimisation across all spends, especially with substantially lower discretionary spends of advertisement and promotion expenses helped deliver better Ebitda margins.

Hardening of commodity prices and competitive forces may pose a challenge to maintain this expansion rate going forward and will depend on the market scenario. With normalcy gradually regaining, the marketing expenses and brand investments are likely to increase, and therefore the Ebitda expansion of 830 bps YoY will not be sustainable, the company said.

With renewed consumer sentiments post-Unlock, the festive season sales are expected to be better than last year owing to pent up demand from previous quarters.

At 10:41 am, the stock was up 7 per cent at Rs 218 on the BSE, as compared to a 0.17 per cent decline in the S&P BSE Sensex. A combined 930,000 equity shares changed hands on the counter on the NSE and BSE.