It is the 3rd largest player in the Fans segment and has been in operation for over 60 years;
The avg. age of employees stood at 37 years in FY18;
1/12
Recently, it diversified into related product categories like Lighting, Switch gears, Air coolers, Water Heaters, etc;
Orient's 13.5% revenue CAGR over FY18-20 has outpaced Havells India (+7.6% CAGR) and Crompton Greaves Consumer Electricals (+5.9%);
2/12
Orient enjoys a similar gross margin as its peers but has one of the lowest EBITDA margins;
This is on higher employee cost and advertising spends, suggestions, that Orient is perhaps in the investment phase;
Orient generates a RoE of over 22%, which is superior to many peers;
The Electronic Consumer Durables (ECD) segment-
-comprising Fans and other appliances, has grown by ~11% CAGR over FY11-20 and forms ~70% of the revenue, while the Lighting and Switchgear segment has grown ~29% CAGR and constitutes the remainder of revenue;
4/12
Industry size and growth trends:
Over FY12-20, Ceiling Fan volume CAGR was ~7%;
Fans have higher penetration (~80%), thus the opportunity from higher penetration-led growth is limited.
5/12
Strong case for EBITDA margin to converge with the 13-15% range enjoyed by Havells and Crompton;
It has already reached a double-digit margin in FY21;
Earnings are depressed on higher depreciation v/s peers (absolute depreciation is higher than the leader, i.e. Crompton).
6/12
Aspirations+Innovation = Formidable Challenge
Post demerger from Orient Paper and Industries in FY17 OEL is fast establishing itself as an innovative brand in Lighting, Appliances, & Switchgears;
Demerger resulted in renewed management focus on the business, led by innovations;
Consumer Durables Industry in India.
Crompton is the largest brand, commanding a market share of ~25% in value terms, followed by Havells and OEL.
8/12
Ad spends one of the highest among peers:
As a % of sales, ad spends remained at 4% in FY20 and at similar levels over FY18-20,
This is still higher when compared to 3.4%/ 2.2%/ 1.2%/ 2.3% for Havells/ Crompton/ Polycab/ V-gaurd.
9/12
Debt to reduce given Orient's strong focus on cash flows and working capital:
The working capital cycle has gradually improved to 50 days in FY20 (v/s 65 days in FY18) owing to a reduction in debtor days.
10/12
Strengths:
Strong brand name in the Fans market,
Experienced top management,
Local manufacturing capabilities to aid margin expansion,
Higher focus on branding with a focus on ad spends.
11/12
Threats:
Strong competition, likely supply chain normalization could aid unorganized/smaller players.
Opportunities:
Diversification into wider Electrical products and Appliances category.
Weakness:
Higher dependency on Fans.
End of thread 🧵
12/12
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Consumer sentiment continues to improve month on month. After 49% YoY volume decline in 1QFY21, volumes had already recovered to flattish levels YoY by 3QFY21. Thus, further sequential improvement is encouraging.
Innovation & renovation activity is also likely to pick up further
Mr Kripalu believes the ongoing Prestige & Above (P&A) trend would only accelerate as high involvement categories such as alcohol would move toward premium products as they get more affordable for the population
The revenue stream is diversified, with 52% of revenues being market-linked (transaction charges / IPO & corporate action / KYC are 21/11/13% of revenues).
1/24
Annual issuer charges (~29% of rev) are determined by SEBI driven by the certainty of earning custody charges from existing issuers.
CDSL earns revenue by charging annual issuer fees to corporates and account maintenance charges, user facility, and transaction fees to DPs
2/24
The remaining 19% of revenue is derived from other services like, e-voting, e-CAS, account maintenance, etc.
Industry structure:
Duopolistic industry structure with high entry barriers:
Highly regulated by SEBI; the chances of a successful 3rd depository in India are very thin
Gland stands out in the pharma universe with a solid track record of developing & commercializing complex products in the injectables space;
1/1
It reported a 27% sales CAGR to INR 26b over FY18-20;
Geographies such as Europe/Canada/RoW markets grew at a higher CAGR of 46%/64%/67%.
Top 5 clients constitute 48.9% of revenues in FY20.
1/2
Complex portfolio/manufacturing capability to lead sustainable growth.
It intends to further enhance the pipeline through efforts on peptides, long-acting injectables, suspensions, hormones, and vaccines as well as improve growth visibility over the next 3-4 year.
1/3
Glad I just finished reading all of 'Buffett partnership' and 'Berkshires letters' by Warren Buffett yesterday. While I am almost done compiling them in a short book, thought to share some of the most important lines here. Excerpt take from the letter 2013: @Gautam__Baid
• You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well.
1/n
Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick "no"
• Focus on the future productivity of asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, forget & move on
2/n