Orient Electric Ltd

NSE:ORIENTELEC

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Orient Electric Limited Q2 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Nirransh Jain from BNB Paribas. Thank you, and over to you, sir.

[Nirransh Jain, analyst]

Thank you, and good evening, everyone. On behalf of BNP Paribas, we welcome you Orient Q2 FY '25 Results Conference Call of Orient Electric. We have with us Mr. Ravindra Negi, Managing Director and CEO; and Mr. Saibal Sengupta, Chief Financial Officer.

Now I hand over the call to the management for initial comments on the quarterly performance, and then we'll open the floor for a question-and-answer session. Thanks, and over to you, sir.

[Ravindra Negi, executive]

Thanks, Nirransh. Good evening, and a very warm welcome to all of you. I trust, you have the chance to review our presentation, which we have made available on the stock exchanges and our company website. Thank you for your participation of curse for taking the time out to review our results.

Let me start with a quick overview of quarter 2. Quarter 2 has been a tale of 2 halves for the industry. This is reflecting insights from various third-party reports and on market interactions. The first 6-week flat in momentum we anticipated after very strong summers in quarter 1. This was evident in the subdued of regional festivals and the online reasons.

Revenue spending in the first half of Q2 on projects in infrastructure also saw a slow start during this period. And on top of its commodity prices fluctuation impacted the margins. However, the later half of the quarter showed promising signs of discovery. Across most of the categories Orient operates in that's including lighting, appliances and fans. This was largely driven by the preseason of festive buildup that began taking shares in September, both for online and offline.

Given this backdrop, Orient's performance been very encouraging. Our growth journey continues steadily across segments and all our strategies are on track and yielding results. I'm pleased to report our top line of INR 660 crores, representing 16.5% year-on-year growth for quarter 2. The lighting and switchgear segment clocked INR 221 crores, growing at about 8%, while ECD registered a robust growth of 21% with a revenue of INR 440 crores. Our strategic initiatives were designed to improve our gross margin, a key indicator of our investments yielding results. And I'm happy to share that our gross margin has expanded by healthy 240 bps year-on-year to 32.4% of revenue.

Our better mix of products coupled with cost optimization through Spark Sanchay program. This continuously enable gross margin improvements and helping us mitigate commodity shocks. We are now back to our pre-COVID levels across -- pre-COVID levels of gross margin deliveries. With a strong focus on premiumization and mix improvements, we expect to stabilize it and be in the same range. We are enhancing our premiumization efforts across all categories and have initiated steps to identify key gaps and launch relevant products.

Let me highlight our efforts in the Lighting segment, a clearly articulated focus area for us. Despite continuing value erosion, we are performing well in the Lighting segment, with high teens volume growth in the B2C segment. Our focus on increasing value-added premium products in the Lighting portfolio, such as CoB range of products, high-voltage lamps, emergency lamps, town lighters, rope lights and panels is helping us deliver growth.

Our value-added portfolio is inching towards 60% of our overall [ ceiling ] business, which is significantly better than the industry average. We've launched our digital campaign, thoughtfully curated lights we own, and introduce more NPDs in this value-added segment in H2.

The B2B market in Lighting also shows promising potential, particularly for infrastructure and Facade Lighting projects. During this quarter, we executed the Puna Metro project and Wadi Flyover project in Nagpur. Our ongoing efforts to secure large orders and expand our portfolio in this domain are yielding positive results, positioning us well for continued growth in B2B segment of Lighting.

While the Lighting segment achieved double-digit value growth. The B2B segment grew by high double digits with healthy inquiries and a strong order book. We are leveraging our successful experience to enter the subcategories in the B2B space, such as tunnel lighting and stadium lighting. Our B2B share of business in Lighting, which is approximately around 20% is set to rise further.

In our Fan segment, we continue to push premiumization, resulting in a better mix, higher realization and value growth. We've identified BLDC as a focus segment for premiumization and are seeing good results. As we speak, we have achieved a 25% share of BLDC revenue to our total ceiling fans revenue, which with most of our new product developments driven by the BLDC portfolio expansion.

To ensure better quality and reduce complaints, we are also producing PCB for BLDC fans in-house fulfilling around 75% of PCB requirements through captive production. Our premium portfolio in fans today stands at about 30% of the revenue, and we aim to increase it to about 40% to 45%.

Our efforts in premiumization across all categories, whether it's BLDC in fans, value-added [ ceiling ] and lighting, tech-enabled premium products in street lighting or in appliances are demonstrating effective strategy for better realization, stronger product mix and better margins.

Our Spark Sanchay program, aiming for cost leadership has delivered INR 36 crores for the first half of the financial year, and we are committed to surpassing our standards by the end of the year. This initiative is supporting gross margin delivery by both expanding and protection is from commodity changes.

Switchgear and house wires experienced muted growth in the quarter due to commodity fluctuations and pricing pressure. However, this segment has grown sequentially, and we continue to expand our distribution. We're engaging with electricians, introducing festival schemes and conducting other market development activities to enhance our presence.

In the fans, our transition of 10 MD states to DTM is completed and is stable. DTM states have outpaced the growth rates in fans and have grown by 35% for the quarter, showing market share gains in many states. DTM now contributes about 30% of the fans GT share of business, while MD states have also grown at a fast double-digit growth.

Appliances had a strong quarter with high double-digit growth, supported by festive tailwinds in e-com and quick commerce across all categories, including coolers, water heaters and small appliances. Our premiumization journey is supported by consumer centricity with service identified as a key differentiator. We are transitioning our fans servicing from master distributors to direct company service, effectively creating a DTM for service.

Currently, 21 states in union territory are serviced directly by the company. Overall, we covered 19,000-plus PIN codes with a wide network of authorized service centers. Consequently, we've significantly improved our service experience with almost 80% of the complaints resolved within 24 hours. Emerging channels of business are another pillar of growth for us. Our digital and retail channel delivered high double-digit growth in the quarter, primarily backed by water heaters and small appliances. We're seeing positive traction and sell-out from e-com platforms, indicating market share gains. Quick commerce is also gaining momentum, and we've started listing on Blanket and Zip Codes in this regard. Finally, our pursuit of growth is reinforced by enhanced manufacturing excellence.

Our Industry 4.0 greenfield plant in Hyderabad has been fully commissioned and is being geared up for stability, efficiency and scale up for the forthcoming season in H2 for this financial year. Faridabad plant has also been upgraded in terms of manufacturing excellence in quality. Now turning to our overall financial performance for the last quarter, we report an EBITDA margin of INR 36 crores at about 5.3% of the revenue, an expansion of 180 bps year-on-year due to improved gross margins and better operating leverage. The PBT for the quarter was at INR 14 crores, representing a normative of 103% after adjusting for the base effect of landfill.

In conclusion, we remain optimistic about our strategic initiatives and the positive impact on our performance. We are committed to navigating the evolving market landscape while delivering sustainable growth and value to our shareholders. Wishing the best of health and happiness to each one of you for the coming festivities.

Thank you, and now we are open for any questions that you may have.

[Operator]

[Operator Instructions] The first question is from the line of Natasha Jain from Nirmal Bang.

[Natasha Jain, analyst]

Congratulations, sir, on a good set of numbers. My first question is, can you give us an update as to where we are in terms of our export order for switchgears in Europe? As and have we exported our first batch, what is the preliminary feedback that we've got there? And where do you see that scaling and also visibility in terms of TPW export to Europe from your Hyderabad plant?

[Ravindra Negi, executive]

Thank you, Natasha for the questions. Let me take the first question. On the switchgears, we've been exporting switchgears to the Europe market for some time. There was new products that we've send 2 months back, we are still waiting the first feedback of consumers because this has to go to Ukraine and is in transit. Once we get that, then we're expecting some more orders and order inquiries to flow in. So that's work in progress.

On the second question on the TPW, we started doing exports on TPW, and that's almost about 20% of our exports and fans coming in TPW. The Hyderabad plant is under stability. While we are doing the production, that's largely for domestic that we've done in the last couple of months. For exports, we will now get into the season and start using Hyderabad facility for exports.

[Natasha Jain, analyst]

Sir, should I assume that for both Switchgears and TPW fans, export is a higher-margin business?

[Ravindra Negi, executive]

So for TPW, I can definitely say that it's a very competitive market. China pricing are very, very, very competitive. So exports on TPW is not a higher-margin business. While our efforts in Hyderabad would be to control the cost, but you are kind of capped on the pricing ability in the market when you go on TPW. Switchgear versus domestic, it's not that higher business, but still a reasonably okay margin that you make on exports.

[Natasha Jain, analyst]

Understood, sir. And my second question is on the cost savings worth INR 36 crores in H1 '25. So can you please call out as to what line items did we make the savings on? And can we expect this number to continue as a run rate going forward?

[Ravindra Negi, executive]

So Natasha, Spark Sanchay program is not for one particular line item, and there are -- you kind of look at all the 360-degree facets of for your efficiencies. You look at everything where you can possibly save costs. And the large bit of it is the VAV exercises that you do, process engineering, reengineering that you do. So if it's difficult to say that, okay, this one part gives you more. We've done INR 36 crores in H1. Last year, we did about INR 75 crores. Our aim is to definitely surpass last year, and that will help us deliver better margins.

[Saibal Sengupta, executive]

INR 75 crores was for the quarter -- for the full year.

[Ravindra Negi, executive]

Last year, was INR 75 crores for the full year. Just to clarify.

[Saibal Sengupta, executive]

Natasha to add, these franchise savings come from -- mainly from -- it's spread out between the consumption, raw materials, the wages, power and fuel, transportation. So it's a spread of items. It is not one thing.

[Operator]

[Operator Instructions] The next question is from the line of Aniruddha Joshi from ICIC Securities. .

[Aniruddha Joshi, analyst]

Yes. Thanks for the opportunity. Sir, in terms of overall market outlook, how do you see the market overall because we have seen a lot of people indicating rural offtake has improved or even the offtake in North and East has been better. So how do we read these means? Do you -- are you seeing really the uptick on ground and especially for the -- our category of the products?

[Ravindra Negi, executive]

So Aniruddha, as I said, there were 2 parts of -- if I were to look at quarter 2, there were clearly 2 distinct parts. The first half was where we didn't see the momentum of quarter 1 flow into the quarter 2, specifically for summer products.

But the second half is where we're seeing some green shoots, both at the urban and the rural side. We closely monitor our sellouts, both in the online and the offline space. I think we're seeing green shoots in most of the categories that we deal in.

The real test is this year, Diwali is 1st of November. The real test is post-Diwali, how does it sustain? So we've seen some festive sellouts that's still seasoning. So to be fair, to give any number post Diwali would be just a guesstimate. But clearly, last couple of weeks have been much better than the entry to quarter 2.

[Aniruddha Joshi, analyst]

Okay. Understood. Sir, in terms of the margins, if we look at the EBITDA margin over a period of FY '18 to '22 was pretty healthy. In fact, it averaged around 9%. But we have seen the margins in '23 and '24 have corrected materially somewhere around 5%, 5.5%. In fact, this year also, somewhere around 6%, most likely FY '25 also. So when do we see the margins going back to the near the historical levels? Any indication? Or how should we read about the margins? Or is there a structural headwind that's stopping from moving the margin upwards?

[Ravindra Negi, executive]

No, I don't think so, Aniruddha, there is any structural headwind that we foresee in the business. In fact, all the investments that we had to do to start delivering a higher double-digit better than market growth seems to have been put on ground. We've got investments in terms of the right functions and right BUs that we've put in. We've made the investments in Hyderabad, the structure there. So from a cost perspective, I don't think so. And these are headwinds. These were the right investments. It's just that there was a lead lag effect. And that's why you see margins in the range of about 5.5% to 6%.

Now going forward, we expect all our operating leverage to start kicking in, and you will see exit this year better margins. Will it go back to the earlier 9% level in the next 2 quarters? Maybe not. But definitely, next year onwards, we should start seeing us inching towards that. And that's why a lot of our premiumization effort in getting the right product mix and not just only in one category, but across different categories that we deal in. That's what will help us deliver this.

[Aniruddha Joshi, analyst]

Okay. Okay. Understood, sir. And last question from my side. In terms of -- while we are pretty strong in fans, I guess, 60% plus turnover. But more expansion in other categories, I guess, that's where, I guess, the growth can be materially higher, considering the favorable base or a smaller base for us.

So any update on the other categories where we can have a materially higher growth like kitchen appliances or even other new segments that we can look at? Any update on that? That's the last question.

[Ravindra Negi, executive]

Yes. So I did spell out saying that in the appliances, we grew at a very high double-digit growth, both in terms of water heaters and coolers, coolers, in fact, slightly lower base, but our growth were 5x, 6x in this quarter. So that's one segment which is helping the ECD grow overall.

But the other segment, which we clearly called out and said this is our focus area is Lighting. And if you were to look at Lighting and within the Lighting industry, we would be amongst the only few brands which have been consistently beating the industry numbers and gaining market shares. Even now out of the declared results, we are the ones who are now in the Lighting and Switchgears, we've declared about 8%, while Switchgears and wires had a little muted growth, but lighting had a double-digit growth. And within that, the B2B is a clear strong focus. And that's how we are trying to balance our portfolio, keep pushing, which is our strength on fans. We will drive the water heaters and coolers and appliances and Lighting is clearly called out and then Lighting both plays the value-added game in the B2C side, protect the margins where in the industry, there is headwinds of price erosion, which is happening and build our capabilities and drive B2B significantly better.

[Operator]

[Operator Instructions] The next question is from the line of Nirransh Jain from BNP Pariba.

[Nirransh Jain, analyst]

Sir, my first question is on the gross margin side again. So I just wanted to better understand that like since you have guided that the gross margins are expected to remain in a similar range. So the Spark Sanchay program that we had initiated for the cost takeout programs, so are we calling out that, that program has mostly been concluded and that ideally would now take us towards the stable gross margins.

And the follow-up to that is that if the gross margins remain at a similar range, are we confident that we can inch up our operating margins to close to double-digit levels that we had always aimed for?

[Ravindra Negi, executive]

Nirransh, thanks for your question. And I think if you were to look at our gross margin trajectory for over the last 8 to 10 quarters, we had dropped. If we were to look at in a market where there's been -- which has been very competitive, we would be amongst the only few brands who inched up significantly on the gross margins, while we dropped, but we've come back very sharply.

Spark Sanche program definitely is a continuous program, and we keep finding opportunities both in the product process engineering, and it's a program which will not stop, but we keep evolving. The second part, which I highlighted about premiumization, which will give us a better mix, which will make sure that if there are any commodity fluctuations or price fluctuations or competitive pressures in the market that comes in. So both these things will help us either increase our gross margins or remain within that range. The other part on the overall margins or EBIT margins, yes, there is investments that we've done in terms of structures and investments in manufacturing. All this will start giving us operating leverage. In the next couple of quarters, we will inch up from where we are right now. And in the next year, we should move towards our earlier level.

[Nirransh Jain, analyst]

Sure, sir. Sir, and my second question is on the wires segment. So I just wanted to better understand what led to the muted growth in this quarter for the wires portfolio because generally, we are seeing a better numbers from the peers group considering that the commodity went up significantly higher during the last week of the quarter. So that gave the incentive for the players to push up in the channel.

[Ravindra Negi, executive]

Yes. So in wires, firstly, there are 2 aspects to it. We are not a very big player in wires. And this is a segment that we've looked at complementing our Switchgears business. When the commodity prices increase, you can push wires in trade. It's just that we do a lot of trading and hence at a certain point of time versus somebody who makes in, we had a little disadvantage of how much to buy at what rate and at what rate to push.

So that's where I think that's what impacted us a little bit for quarter 2 now that the commodities are stable and in fact, there's been a price downward revision -- sorry, upward revision one more that happened. So we hope to get back in the wires also.

[Operator]

Next question is from the line of Paarth Gala from HDFC Securities.

[Paarth Gala, analyst]

Sir, a couple of questions. One was on the DTM states. Now all the states that we had gone directly into have more or less stabilized. Are there any more states under consideration going forward? If you can shed some more light on that?

[Ravindra Negi, executive]

Yes. So Paarth, there are 2 aspects. One, every time you do and last time also I spoke about it, every time you do a transition, it takes a little time for the market and the DTM market to stabilize. We've done about 10 DTM markets. One of the large ones that we did last year was Gujarat, while we did in quarter 1, [ JNK, NXP ], but those are smaller markets.

Gujarat is now fully stable. We've grown by 35% overall in our 10 DTM markets. I think more or less, we are stable. We have put in our people. We're seeing distribution expansion happening. And I think our going direct is helping us gain and drive our own synergies and the agenda that we want to drive in the market. As far as adding more to it concerned, we are evaluating and we'll keep evaluating more sales. As and when we are ready to do this, we will let you know. We don't give a prior announcements to the markets that we want to do.

[Paarth Gala, analyst]

Okay. And secondly, this quarter now, the consulting cost has come off, right? But if you just look at the unallocable expense, there is still some increase. So from around INR 48 crores, INR 49 crores, we've gone to INR 50 crores. Can you just shed some more light on that? I mean, are there any more investments being made? Or it's something to do with preponement of the festive season and some ad spend on that side?

[Ravindra Negi, executive]

No. So there are no investments to be done. And if you were to look at it, largely, there is -- from an accounting perspective, I'll tell you that the EPR which was not there last year in Q2. That's one add-on element in that, plus depreciation would also reappear or as a separately, but EPR would be the large one.

[Saibal Sengupta, executive]

Paarth, there are 2, 3 factors. First of all, there is a couple of base effects. While you are seeing the consultancy side of it on the reduction, which is not there on Q2. But as far as the ETR is concerned, if you recall, we had done the entire provision in Q4 last year. This year, it is spread all over the 4 quarters in this.

So therefore, as a result, there are these 2 base effects. On top of that, the other expenses also includes a good chunk of variable costs, which is essentially transportation and service costs, which is proportional to the volume growth and the volume which is transported B2B and which has a little bit of higher impact for the digital e-commerce channel as well. So all those factors are contributing. There is no separate investment either in the lineup nor planned nor is it happening.

[Operator]

[Operator Instructions] the next question is from the line of Naitik from NV Alpha Fund.

[Naitik Mutha, analyst]

My first question is I wanted some detailed understanding about the other expenses. If I look at the absolute amount, it's been quite volatile quarter-on-quarter. I'm not talking about the percentage, but the absolute amount. So one, I understand the consultancy cost has reduced. But now what I want to understand is what percentage of this would be variable and what percentage is fixed in nature so that we can understand the nature of the other cost better?

[Ravindra Negi, executive]

Naitik, largely about almost 2/3 would be variable, and about 1/3 is fixed in this.

[Saibal Sengupta, executive]

And also, there's a marketing component as well.

[Ravindra Negi, executive]

Yes, including the marketing that will be about 2/3.

[Saibal Sengupta, executive]

And not to forget, Naitik, what I mentioned in the previous question is that please account for the base effects as well as far as [ DPR ] is concerned.

[Naitik Mutha, analyst]

No. So I'm just looking at Q1 and Q2, I'm not even looking at last year. I'm just looking at from a quarter-on-quarter basis. So there is a wide variation. So that's why I wanted to understand what causes this much of a shift. So one I understood that is consultancy, but apart from that is what I wanted to understand.

[Saibal Sengupta, executive]

Naitik, Q1, the volume -- Q1, please understand it is a peak period for us for fans, coolers, the summer season, where the volume movement, the volume throughput is far, far higher. So therefore...

[Naitik Mutha, analyst]

Yes. So 66. I got my answer. So a large chunk is variable. That's why there is variation.

[Ravindra Negi, executive]

The proportion of variable and fixed sequentially hasn't dramatically changed.

[Naitik Mutha, analyst]

Right, right. Got it. Sir, can you share the split of Lighting and Switchgear in the segment?

[Ravindra Negi, executive]

So we don't usually split, Naitik. But as I said, we've had double-digit growth in Lighting business, and we had a slightly muted in Switchgears and wires.

[Naitik Mutha, analyst]

No. So what I -- where I'm coming from is there's huge fluctuation in the margins also, which I understand is from growth in Switchgear, which is this quarter. So our margins significantly higher in the Switchgear segment than the Lighting segment?

[Saibal Sengupta, executive]

At the gross margin level, yes, but not at the EBITDA level. As Ravi already mentioned, the share of business of Switchgear and house wires are far lesser. And with the accelerated growth of Lighting, Lighting holds a much higher EBIT delivery. So that's what drives the segment results.

[Naitik Mutha, analyst]

And last question this pricing erosion in the Lighting, what's your -- how long is it going to go or it's largely done? What's your sense on that?

[Ravindra Negi, executive]

So Naitik, we were hoping that quarter 2 onwards because last year around the same time, the Buzz N Banter, whatever the efficiency of BOB, which was helping bring the cost down was passed on to the market and to the consumer. We thought that we will start seeing some slowdown in it. I think it's largely regional players and smaller brands who've got in where they have compromised further on the quality and pushed the envelope down.

So we hope to see it stabilize. But as we speak, it's still prevalent in the market. But we're driving it very differently. We are focusing on the value-added part, not that we are not participating in the Buzz N Banter, but we are driving the other part of the business far stronger and far better with new products and new product introductions, which is helping us navigate this price pressure in the market.

[Operator]

[Operator Instructions] Next question is from the line of Rahul Gajare from Haitong Securities.

[Rahul Gajare, analyst]

I just have one question, and maybe this is following up with one of the earlier questions on the call. I wanted to understand if you can give us a qualitative angle on the ECD growth in terms of demand, whether it was coming from urban, semi-urban, smaller towns, et cetera. So that's the first part of the question.

And the second part of the question is if DTM has grown -- I mean, if DTM states have grown by about 35%, it means non-DTM have grown at a single digit. So I wanted your thoughts on that also.

[Ravindra Negi, executive]

So Rahul, thanks, and I'll give you a little sense to it. First, let me take this whole conversation about DTM and non-DTM that's only on the GT, which is the general trade part that we're speaking about, then there is e-com and other part also. So our DTM states have grown by 35%. Our MD states have grown by good double-digit market. It's on the other parts of the business, which is the emerging channels like CSD, CPC or e-com, where we've seen -- we focused on sell-out and not pushed in much sell-in where we've seen a single-digit growth. But we've seen growth, which has been like a secular growth all across all categories.

As far as markets are concerned, we've driven 2 things very hard and which is where we've seen our results come in is that on the new products, BLDC and premiumization, we've seen urban and semi-urban drive those growth for us, whereas, as I said, in the second half of the quarter, we've seen some bit of green shoots in the rural part also. First half of the quarter, I would say that the rural market did not kick in at all.

[Operator]

As there are no further questions from the participants. I would like to hand the conference over to the management. Okay. We have a question. The next question is from the line of Nirransh Jain from BNP Paribas.

[Nirransh Jain, analyst]

Just a follow-up on the EPR cost. So you have mentioned around, I think, fourth quarter that the EPR cost for FY '25 would be roughly around INR 20 crores to INR 21 crores. And so just wanted to check, so if this number has changed? And how much price hike we have taken to recover this cost? That's my first question.

[Ravindra Negi, executive]

Nirransh, we're still in line with what we had projected for the year on the EPR, and that's a calculated EPR cost. We had taken one price hike in quarter 1. And if we were to look at it, by and large, we had put in about 1% in the price side for catering to the EPR impact. We have taken one more price increase in quarter 3 as we speak, about 10 days back, and that's largely to take care of the BIS implementation that's happened on PPW and some bit of commodity increase in the ceiling that we think.

While there is a new gazette from the government, which is now putting an environmental compensation rate, and that may have an impact. But as we speak, there are representations from the associations, both from an ELCOMA perspective or IFMA perspective, that's gone to the government. We will wait for the response from the government to see how EPR and its consequent impact will be there for the industry. Even the [indiscernible] has put forward their reservations on this new environmental compensation.

[Nirransh Jain, analyst]

Sure, sir. That's helpful. And sir, lastly, on the TPW side. So last quarter, we saw some kind of a capacity constraint in a seasonally strong quarter. I just wanted to check that is that capacity constraint being resolved now, especially from the Hyderabad facility coming up? Or like there is still some constraint to it?

[Ravindra Negi, executive]

No, no. So with Hyderabad now functional and we're scaling up in the next couple of months, we'll be fully there for our capacity requirement and for our growth requirements in the coming season.

[Operator]

We have a follow-up question. It's from the line of Natasha Jain from Nirmal Bank.

[Natasha Jain, analyst]

So just one question on CapEx. Can you please tell us what kind of run rate can we expect for current year and in the medium term?

[Ravindra Negi, executive]

We have -- Natasha, we have already capitalized the Hyderabad project. So there is no more further project coming up. As we always maintain that INR 50 crores to INR 60 crores is our normative CapEx for the year. So we hope to be being range bound around that.

[Natasha Jain, analyst]

Understood. And sir, in terms of working capital days, what can we expect in terms of settling in the medium term?

[Ravindra Negi, executive]

We have already reduced the working capital substantially end of September. It's about 9 days reduction has already happened to 19 days, which is an impressive move, which has happened on a like-to-like basis. We obviously, we strive to maintain the similar kind of rates. But only thing is that be mindful of the fact that during Q3 and part of Q4, we have to go through stock buildup for the season, and we have to go through for extra credit support also for the season pickup. So those things -- and that -- so that will be on a like-to-like basis with the corresponding period in the previous year as well. So that same trend will continue. But yes, our aim is to maintain the working capital at these lower levels. .

[Operator]

That was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.

[Ravindra Negi, executive]

Thank you, everyone. And from Orient, we will continue to deliver better than market growth like the one we've delivered in quarter 2 and wishing all of you the very best of health and festive season. Thank you, everyone.

[Saibal Sengupta, executive]

Thank you, everybody. Wishing you all a very happy Diwali.

[Nirransh Jain, analyst]

On behalf of BNP Paribas, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.