Buy Orient Electric, target price Rs 350: Motilal Oswal

Motilal Oswal has buy call on Orient Electric with a target price of Rs 350. The current market price of Orient Electric Ltd. is Rs 309.45.

Orient Electric Ltd., incorporated in the year 2016, is a Mid Cap company (having a market cap of Rs 6455.74 Crore) operating in Consumer Durables sector.

Financials
For the quarter ended 31-12-2020, the company reported a Standalone Total Income of Rs 619.02 Crore, up 42.46 % from last quarter Total Income of Rs 434.51 Crore and up 24.57 % from last year same quarter Total Income of Rs 496.93 Crore. Company reported net profit after tax of Rs 51.94 Crore in latest quarter.

Investment Rationale
Despite higher investments in people and branding-related spends, and hence potentially lower margin at present, OEL generates a RoE of over 22%, which is superior to many peers. It forecasts revenue/EBITDA/PAT growth of 20%/18%/21% over FY21-23E. It initiates coverage on the stock with a Buy rating, assigning a TP of INR350 per share

Promoter/FII Holdings
Promoters held 38.5 per cent stake in the company as of Dec 30, 2020, while FIIs held 7.5 per cent, DIIs 23 per cent and public and others 30.9 per cent.