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Why Orient Electric Share Price is Falling

Apr 10, 2023

Why Orient Electric Share Price is Falling

Consumer durable stocks have experienced a lackluster performance in the last six months, with the sector seeing the third highest outflows from foreign investors.

The sector has seen an outflow of approximately Rs 59 billion (bn) from foreign funds during the same period.

Out of the 11 constituent stocks in the BSE consumer durables index, eight stocks have generated negative returns, indicating steep double-digit losses during the current financial year.

Tapering of pent-up demand, lower discretionary spending, and higher costs have been the key dampeners in the performance of these stocks.

Most companies reported a decline in profits during the December 2022 quarter, with some even incurring losses due to the hit to profitability. And much of the growth in revenue for companies was price-led.

Within the struggling consumer durables sector, Orient Electric has felt a blow, with a decline of over 12% in 2023.

Let's find out why Orient Electric is reeling under pressure again.

Change in management

On 3 April 2023, Orient Electric experienced a significant setback as the CEO and MD, Rakesh Khanna, resigned from his position after serving for eight years.

This sudden departure has resulted in negative sentiment in the market about the company's ability to retain top talent, leading to a selloff in the company's stock.

The departure of a CEO can create uncertainty and adversely affect investors, employees, and other stakeholders, leading to a decrease in the company's stock price and overall performance. While there is no scientific way to predict the extent of the impact, it is perceived as a negative development.

However, if the CEO's resignation is followed by a smooth transition to a new leader, the company may be quickly able to adapt and continue its operations without significant disruption.

In line with this, Orient Electric has appointed Rajan Gupta as its new Managing Director and CEO, effective 4 April 2023. He has previously served as the MD & CEO of Hathway Cable and Datacom and Chairman of the board of GTPL Hathway.

In his career spanning 25 years, he has worked in various functions and companies, including Tata Telecom, Hindustan Coca Cola, and Asian Paints.

What next?

As summer approaches, Orient Electric expects a natural drift from the fan and housing segment and the replacement market.

Also, the construction of new houses and the replacement of new energy-efficient star-labelled fans from the older units would be growth drivers for the segment. Its lighting business is also set to grow well in the B2B space, currently earning 20% from B2B space.

Its facade lighting is growing fast, and the company has secured some prestigious projects for lighting in cities.

With predictions of harsh temperatures this summer, the company anticipates good revenue growth in the financial year 2024 from its fans and cooler business.

Coolers have faced headwinds in the last three years because of the pandemic. However, demand is expected to be robust in the upcoming summer. The air conditioning industry, which sold a record 8.25 m units in 2022, is projected to maintain its double-digit growth trajectory.

Low white goods penetration, including air coolers and air conditioners in India, could represent another long-term catalyst for Orient Electric.

How Orient Electric shares have performed recently

Orient Electric shares have declined by more than 15% in a month. Over the past week, the company's shares have traded lower by 16%.

Orient Electric touched its 52-week high of Rs 358 on 7 April 2022 while it touched a 52-week low of Rs 820.6 on 10 April 2023.

chart

About Orient Electric

Orient Electric is one of leading consumer electrical brands in India, with a diverse portfolio of fans, lighting, home appliances, and switchgears.

The erstwhile Calcutta Electrical Manufacturing Company became a part of the CK Birla Group in 1954 and was subsequently rechristened Orient Electric.

It is the largest manufacturer and exporter of fans from India, with more than 60% export share and has a dominant presence in more than 35 international markets.

Not only this, it has also paved the way for pioneering developments in home appliances, lighting, and switchgear. It is today the third largest manufacturer of LED lamps in India and is also the first Indian lighting brand to have been awarded BEE star rating for lamps.

In the home appliances category, Orient Electric offers a wide range of products, including water heaters, air coolers, and small kitchen appliances.

For more details, check out the ORIENT ELECTRIC company fact sheet and quarterly results on our website.

You can also compare Orient Electric with its peers on our website:

Orient Electric vs Bajaj Electrical

Orient Electric vs Symphony

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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