Ladies and gentlemen, good day and welcome to Orient Electric Limited Q3 FY 2026 Results Call, hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
And now, I have the conference, Dhruv Jain, from Ambit Capital Private Limited. Thank you, and over to you, sir.
Thank you. Hello everyone, welcome to Orient Electric's 3Q FY 2026 earnings call. From the management side, today we have with us Mr. Ravindra Singh Negi, Managing Director and Chief Executive Officer, Mr. Arvind Vats, Chief Financial Officer, and Mr. Sambhav Jain, Head of Investor Relations. Thank you, and over to you, sir, for your opening remarks.
Thank you, Dhruv, and thank you, Iqra. Good evening, everyone, and thank you for joining us for the Orient Electric Q3 FY 2026 earnings conference call. I appreciate your time and continued engagement with our journey of strengthening Orient into a more premium, consumer-centric, and future-ready FMEG brand. We've been interacting with a lot of you over the course of the last six months, updating on our progress of our strategy in action. Let me give you an overview first of the quarter three from an industry perspective. Quarter three unfolded against a dynamic macro background. The quarter began with healthy, festive momentum, with signs of resilience in the domestic environment, supported by steady GDP growth, improved liquidity, and sustained consumer confidence, aided by GST rate realization across various categories. Even though OEL's and FMEG categories were not impacted by this, Q3 started on a positive consumer sentiment towards discretionary spendings.
However, elevated channel inventory and muted demand in cooling categories tempered the industry's overall growth trajectory. In parallel, the industry underwent a major regulatory transition from implementation of the ratcheting of new BEE label norms for ceiling fans effective 1st January 2026. This triggered widespread channel destocking of older models, causing short-term rate dilution. Additionally, a sharp rise in copper prices and commodities added further cost pressures. Despite these disruptions, Orient Electric delivered resilient performance, recording 11% year-on-year revenue growth, driven by a consistent emphasis on portfolio diversification through a multi-product growth engine anchored in consumer innovation, premiumization, and disciplined execution under our One Orient strategy. Orient navigated the seasonal softness well and delivered a standout performance in the ECD segment, with a revenue growth of 12.6% year-on-year and a strong 46.7% quarter-on-quarter increase.
This growth was led by a strong double-digit growth in appliances, especially the heating category, underscoring its central role in our diversification strategy, balancing the seasonal dips in fans for our ECD segment. Prolonged and severe winters enabled significant market share gains in water heaters and room heaters, supported by the launch of our [Whirlflow] fast heating range and a successful extension of the Fatt se Garam campaign. In fans, we delivered decent single-digit growth, demonstrating resilience despite broader industry softness.
Our premiumization playbook continued to gain traction, with BLDC portfolio growing by over 30%, and collectively, premium decorative and BLDC models now contribute to about +30% of our domestic ceiling fans market mix. Our Mission Orange retail program expanded to 4,500 new outlets, enhancing in-store product engagement of our premium portfolio and improving conversion. We also successfully transitioned and stabilized the Pune market to the DTM model.
MP and Chhattisgarh transitioned previously to direct service, and it has now stabilized. We further strengthened our service infrastructure by implementing four-hour service commitment in fans and water heaters across 18 major cities. Another key growth engine, lighting and switchgear segment, sustained its growth momentum with a 7.1% year-on-year increase in revenue. In the consumer lighting, we continue to strengthen our market share with a single-digit volume and value growth and a mix shifting towards luminaires, which rose to 66% contribution versus 61% last year, driven by COB downlights and panels. Panel lighting also grew in double digits. However, tender business had a sharp one-time degrowth on the back of a higher base last year, leading to an overall flat-ish lighting revenue.
Our brand campaign for lighting, One Brand Voice, featuring MS Dhoni and Kusha Kapila in the podcast format with the tagline, "Fans wale Orient, lights bhi banate hain ," has resonated strongly across both trade and consumer segments. Our switchgear and wires business delivered well this quarter. Wires doubled year-on-year, although on a very small base, supported by strong acceptance in trade and influencer ecosystems. Switches also posted high double-digit growth, supported by sustained electrician engagement initiatives and effective cross-selling through our fans lighting distribution ecosystem. This segment, though currently at a low base, is a future growth segment for OEL.
E-commerce grew in high double digits, fueled by improved assortment, positive reviews, and strong performance marketing push. With a substantial part of our marketing investments now directed towards digital and contextual platforms, we continue to sharpen our consumer-centric communication strategy. Exports also grew 40%, strengthening our diversified international footprint, largely led by fans. Across businesses, we are increasing design differentiation, energy-efficient technologies, richer aesthetics, and category-leading user experience, building a premium brand imagery and driving visibility in trade and e-commerce.
Moving on to the financials, in Q3 FY 2026, Orient delivered a resilient performance, building on the strategic levers. Our revenue grew 11% year-on-year to INR 906.5 crores, representing a robust sequential increase of 29% over Q2. This growth reflects our continued focus on market expansion and the success of our premiumization strategy across core and emerging categories. Gross profit for the quarter stood at about INR 270.4 crores, up 4.3% year-on-year. Gross margin was at 29.8%, approximately 30%, slightly below our guidance of 32%-34%, primarily due to elevated commodity prices, especially copper during the quarter.
To mitigate this, we have implemented a 3%-3.5% price increase in January across main categories of fans, lighting, and switchgear. Wires has been passing on the impact of the commodity increase now almost every three weeks for the last few months. Despite margin pressures, I am pleased to report that our operating EBITDA margin remains stable at 7.5%, supported by operating leverage and ongoing cost-efficiency initiatives. PBT, before the exceptional item, was 44% growth, up 19% year-on-year, reflecting strong underlying operational performance. PAT, however, was impacted by a one-time statutory adjustment of 8.7% growth related to implementation of the new labor codes. This exceptional item, while non-recurring in nature, temporarily weighed on reported profitability.
Overall, Q3 results highlighted the resilience of our business model, diversified multi-growth engines, and disciplined execution, positioning us well to sustain momentum in the quarters ahead. Our focus remains clear: build a more premium, more digital, more efficient, and more consumer-centric Orient, with category leadership in BLDC, luminaires, heating segment, and build scale in B2B lighting, switchgears, and wires. Looking ahead, we believe that the new BEE norms, effective 1st January 2026, will act as a structural catalyst for accelerated BLDC adoption. With a strong and expanding energy-efficient portfolio, we are well-positioned to benefit from this shift.
Combined with the expansion of our DTM footprint, strengthening digital reach, and disciplined execution across channels, we remain confident of finishing FY 2025/2026 on a better-than-industry note, with sustained growth, improved profitability, and continued progress towards a future-ready operating model.
With these remarks, I would like to open the floor for your questions. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ravi Swaminathan from Avendus Spark . Please go ahead.
Hi, sir. Very good afternoon. Congrats on a good set of numbers. My first question is with respect to the fans industry. So any flavor on what would have been the volume decline in nine months in the fans industry and how Orient would have performed during this period?
Ravi, thanks. Thanks for the question and thanks for the compliment on the good set of numbers. If I were to look at it, I don't have the final quarter three third-party report, but the volume degrowth, and there are two sets that we need to look at when we look at volume degrowth. Volume at the ceiling fan level has more or less sustained, but the degrowth largely has happened in the TPW segment from an industry perspective that we're seeing. If you look at our last three-quarter results in YTD also, we've done better than industry, better than peers. We've gained market share, and that, if you do any channel check, would be very evident in the market.
Understood, sir. And within fans itself, with respect to the BLDC fan, what is the share of BLDC in your overall portfolio? And you had a while ago mentioned that this BEE norm change would accelerate the shift towards BLDC. What is the key reason behind that happening?
If you were to look at, and if I were to look at my YTD, YTD almost at about 40% on the BLDC is what we've grown. This quarter also, 30% we've grown. Industry sits at about 17%-18% of BLDC of the ceiling fan. We are for this quarter because, obviously, there was a one-time BEE ratcheting and a lot of our eco and sub-segment sales happened. But overall, we are at almost 1/4 of my ceiling fan, closer to 1/4 coming from BLDC. And that's been a very—it sits in well with our premiumization strategy as well as from a consumer optic perspective. When I say the ratcheting, the ratcheting is making the norms tighter, and hence consumers will be attracted to far more energy-efficient products.
And it's not just the energy-efficient products. It's the blend of technology and design is what we are delivering, which is making our BLDC grow. That's why we said the tighter the norms, the adoption of BLDC would be faster. In that segment, if you play a lifestyle design and a tech combination together, the chances for Orient gets far bigger and far higher than most of the other brands.
Understood. And in terms of profitability of BLDC versus the other products, is there a big difference in it, or is it similar in terms of profitability at the gross and EBITDA level?
It's higher. It's higher.
It's higher. Okay. And final question with respect to fans once again, what would be the likely requirement of price increases that is needed to offset the commodity price going up? Like copper prices have gone up, and rupee also has depreciated. So what would be the kind of price increase that will be required for that? And what would have been the price increase associated with just the BEE norm change alone?
So I would not share the breakup between the two, and it will all depend on brand to brand. A substantial part of my portfolio was already meeting the norms set by BEE because we always focus on quality, and we try and give the best to the consumers. We've taken a 3% price increase on 1st of January. We're keeping a very close watch on the commodities. If required, if the commodities stay at these elevated levels, we'll revisit our need for another price increase.
Understood, sir. And my last question is on the lighting.
Sorry to interrupt, Ravi. Please rejoin the queue for more questions.
Sure.
Yeah. Thank you.
Thank you, Ravi.
Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Natasha Jain from PhillipCapital. Please go ahead.
Thank you. And good evening, gentlemen, and congratulations on a good set of numbers. So I have two questions. First, in terms of fans, so you mentioned in your opening remarks that elevated channel inventory and demand also has been tepid. Now, given that there will be cost hike as well, do you think that in 4Q the industry growth could be moderated as a factor of all this and any good trigger we could only see from FY 2027 onwards?
Natasha, thank you. See, we have to look at it. When I say elevated channel inventory, they've been destocking it. Because of poor summers that happened, and we also have to keep in mind where did the impact happen more when there was a tepid summer. So TPW, and that's what I said in the beginning to Ravi's question, TPW got more impacted. Ceiling fan got lesser impact. Now, the ratcheting has happened in ceiling fan and not in the TPW. Given the fact that this year, Holi is slightly earlier, we are expecting and very hopeful for a strong summer. And if the strong summer starts to happen in South first, that kickstarts the TPW first, and then it goes on to the ceiling fan. So very hopeful that quarter four, February onwards, we should start seeing some traction here.
Understood. So that's helpful. And my second question is in terms of lighting. Now, when I see your top-line growth has been moderate, but margin decline has been sharper, and it is even sharper when I see it both on a Q-on-Q and Y-o-Y basis. So is it mainly because of the front buying, and now we are getting impacted more from the cost or the pricing decline? And if so, can you call out what is the pricing decline in this quarter as well for lighting?
So in lighting also, so when you look at the results, it's a combination of lighting, switchgears, and wires all put together. Wires, we were able to pass on the price increase literally every two, three weeks. Switchgear is where our price increase passed on to the consumer did not happen. It's taken on 17th of January, 2% price. So that has been an impact on overall. Lighting also went through a little bit of commodity impact. There also, we passed on the price increase on 20th of January of 3%. So we're hoping that the margins would come back. And obviously, we had spent a little bit more on lighting from a branding perspective, trade engagement perspective. And that's largely a Q3 phenomenon because that's the time when lighting seasonality impact happens. We're building up that category.
We've taken the price increase, in fact, ahead of the industry. So that should bring back the margins in the lighting and switchgear wire segment.
So what would be your B2B, B2C split in lighting?
Largely, I've given guidance earlier also. It's currently 75/25. Ideally, we should move towards some of the industry leaders of 65/35. So we're building our capabilities on B2B and sales model.
Got it. Thank you so much, sir. And all the very best.
Thank you, Natasha.
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Yeah. Thanks for the opportunity and, sir, congrats for a great set of numbers given the macro conditions. Sir, two questions. One, now, as per the new norms, even the star rating two can be only BLDC fan, and means if somebody launches an induction fan, he cannot get a star rating two also, so is that a fair understanding? So if that is the case, eventually, the entire industry may shift pretty fast to BLDC only. Is that one fair assumption? Second question is, now, earlier, induction fans required a lot of commodities like copper and aluminum, whereas in case of BLDC, the major cost is PCBA electronics, which is almost 50% of the cost, so the increase in commodity prices will literally not at all impact or will impact very negligibly to BLDC fans. Again, is that a fair understanding?
So basically, the gap between BLDC and induction may reduce, and it may push for more premiumization. Right?
Anirudh, thanks. I think let me just first address your first assumption of saying the star rated two will be BLDC. I think it's a wrong assumption. What government has simply done is they have service values defined, and at a service value earlier, it was a 4.1 service value for defining as a one star. Now, they've made those service values go up. Government simply said, at this service value, whether you make it through an induction or a BLDC, if you're delivering that service value, that star rating gets applied there. Okay. So currently, theoretically, you can do a 5 star both on induction as well as on BLDC. So it's a factor of service value, and 2 star doesn't mean BLDC. Typically, everybody is giving 5 star on BLDC because you are able to bring the consumption to anything between 28-32 watts.
Okay.
So that's one. On the other factor of saying, yes, there is the commodity consumption that starts to happen very differently, but its PCB is not the 50% part of the overall cost. It is lesser than that. And there are different variable components of making a fan where there is an elevated price increase. So we passed on, I wouldn't say category to category, but it's been far more secular when we pass on a 3% price increase. So there's a cost increase and impact which happens across categories right now.
Understood, if the commodity prices increase, will it require same price hike in BLDC also or induction fans also?
No, so ideally, it will require slightly more on induction than BLDC, but currently, given the price increase and everything, it's impacting both sides.
Okay. Surely. So understood. And just last second question. It seems that we have gained market share in three months or nine months. So if you can indicate what would be the gain of market share and if you can give more color, like which region we would have gained, East, West, North, South, or urban versus rural, any details on that will be helpful. Also, if you can share the market shares in BLDC versus the inductions also. Yeah. Thanks.
Typically, we don't share market shares, and I'll refrain from sharing that. But yes, there are third-party data which is available to most of the people who subscribe to it. We've gained shares across different categories, different markets, and different channels also. So we track them separately. The reports that we have, third parties indicate that we don't share the data, but we seem to be moving in the right direction on the market share gains. Difficult for me to even give you region-wise statement. I hope that's satisfied.
Sure, sir. Thank you. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Rachna from Systematix. Please go ahead.
Thank you. I have a few questions. Within other appliances in ECD, which has seen strong double-digit growth, did the heating category in Q3 FY 2026 grow at a rate of 20% year-on-year? Some quantitative color specifically on the heating category.
Our heating category has done extremely well, and that's the qualitative number that I can give you. We don't share subcategory-wise, but when I look at appliances, given the fact that there's been a good winter, especially in north and east, and there were parts of even south where heating category did grow well, so we've seen a growth that's happened, and water heaters as a category is something that we are doubling down. We've got new models. We've expanded our distribution. We've expanded our channels. That's showing a good traction as we speak.
Even if you could give a ballpark figure, is it grown higher than the ECD category or some range to give specifically color on the heating segment?
We've grown ECD by 12.5%, and when I'm saying qualitatively that we've done high double-digit, you can understand that we've grown higher than the ECD overall.
Okay. My second question would be for nine months FY 2026, did switchgear and wires contribute more than 5%? And what could be the annual revenue run rate for switchgears and wires? And will the contribution grow in the long term? And if yes, what would be the levers?
We've called out earlier also the switchgears and wires is a growth engine for us. And that's where there are tailwinds of infrastructure push and a development by the government happening. Currently, it's clubbed, and obviously, it's clubbed because it's less than 15% of the overall. As in when we put these two as different segments, we'll give you far more details on switchgears and wires. What are the right to win in these segments? Switchgears, we've been doing. We have a good technology partnership. Our EuroTech is one of the better technology-backed switchgear available in the market. Switches also, we're gaining traction there. And on wires, our complete strategy has been saying, "Where is my channel synergies coming in?" Just to give you a little data point, 40% of the 40%-45% of the fan selling dealers sell wires.
So those are the channel synergies that we're doing. Currently, we're seeing as a percentage good growth, but as a value, we need to do a lot more given the opportunity and the size of the opportunity available. As in when it becomes substantial enough, we will share more details on switchgears and wires separately with all of you.
Okay. So is it fair to assume it is around 5%-10% of our lighting business?
Rachna, we don't give a breakdown of that. So I would refrain from answering on that.
Okay. One data-keeping question. Our other expenses have decreased. Could you share which cost components have seen some control and whether it is likely to continue in the medium-long term as well? Same for depreciation as well. There has been a slight decline. So both on these cost components, if you could give some color.
Yeah. So firstly, a slight correction. Our other expenses have not decreased. They've just gone up by about 2.4%. There are a lot of cost initiatives that we're taking, a lot of operating leverage that we're trying to build in the organization, and we'll continue to focus on this. What is not controllable in our favor is these commodities and the headwinds of regulatory and other things that we get. What is controllable with us is some of the structuring and cost and a huge focus on programs like Sanchay that we do, which saved still YTD about 43% growth for us. So those are something that will continue to happen for us. On depreciation, it's hardly anything. It's an accounting number that happens because of our investments earlier and now. It's not much there.
Okay. Thank you.
Thank you, Rachna.
Thank you.
Thank you. The next question is from the line of Dhruv Jain from Ambit Capital Private Limited. Please go ahead.
Thanks for the opportunity. Sir, I had two questions. First is, if you could just provide an update on the Hyderabad plant as to what is the utilization and from when should we start expecting some bit of gross margin expansion being driven from there?
Dhruv, thank you. On Hyderabad plant, as I said, if you look at the nine months and you look at what has impacted the industry, the decline has been the TPW segment far more than the ceiling fan. Our Hyderabad plant is primarily built for TPW, and as I also said, that February, August, we see TPW bouncing back, and we are very hopeful that this summer, starting from south, would be better than last year, and if you read a little bit about it, there is this whole El Niño which is building up again, so that should give us a little bit of more hope. As we speak, utilization is low. This summer would be a full year for us to start leveraging the Hyderabad plant, and that will have the impact on our gross margins, obviously.
Sure. And sir, second question linked to this on the margin side, right? So given how commodities have moved up, there has been the aspiration that you guys have had with respect to touching double-digit margins sooner. So does that mean that we'll not see that number even in this year and it'll get pushed out to FY 2028? Or do you think that the price rises that you're taking will be enough to kind of get you to that number, assuming you grow at double-digit from a top-line perspective in FY 2027?
Dhruv, a lot depends on the commodities, and our assumption is that commodities should start softening from February onwards. If it doesn't happen, we will have to pass on the prices to the consumers, and that we'll do. What helps us is that for the last few quarters, we've been building a very strong portfolio and a focus on premiumization. You were slightly better off when the price increases happened because the consumer at that premium end is slightly more inelastic to the price movement. Hopefully, that should help. We're still maintaining we'll keep a close watch on Q4, and then only if there is any guidance on saying that if I have to shift my goalpost on double-digit, I'll come back to you. But we're hopeful, and we're pushing to move towards the double-digit margin.
Sure, sir. And just one question. Quantitatively, this industry over the last four or five years has seen a fair bit of competitive intensity, right? So in your mind, is that competitive intensity across segments coming off, or it's still sort of the same as what we've seen in the past?
To me, I think the number of entrants has slowed down, but the number of existing players getting into different segments is increasing. Unless you have a right to win and a synergy that you want to build up, each category that you do will have a value of that. So you could probably, if you get into fans, the value of that could be about 200 to 150 growth. Because post that, your distribution, your brand, your service, your premiumization, your consumer pool starts to kick in. So to me, I think the number of new entrants would be not increasing much, but the existing players would then get into each other's categories far more.
Got it. Thanks a lot and all the best.
Thank you, Dhruv.
Thank you. Before we take the next question, a reminder to all. If you wish to ask a question, you may press star and one. The next question is from the line of Balasubramanian from Arihant Capital. Please go ahead.
Good evening, sir. Thank you so much for the opportunity. Sir, currently, premium fan makes contribute nearly 30% of domestic ceiling fans. And what is the target mix of FY 2027 and FY 2028? And how are you addressing affordability to drive further adoption?
Hi. Thank you. Thank you for the question. I had stated a couple of quarters back. For us, the ultimate target is to move this 30% to 45%. A huge amount of focus on BLDC, a huge amount of focus on getting the design language right, fit to feel finished, and a complete go-to-market on selling the premium products is being worked upon. We strongly believe that it's a traction that we are on the right path. 45% is what we aspire to be. We are quite a distance away, but that's where we will have a milestone there.
Okay, sir. Sir, on the export side, we have grown 40% year-on-year, while many players are struggling on the export side because of the tariff issues. I just want to understand which regions are driving this kind of growth and what is the scalability of the export business?
So I'll first tell you from an industry perspective, and I won't want to divulge my areas of where we sell. The industry sells largely in the South, Middle East, and Africa. Those are the areas which are not impacted by tariffs as of now. So I think there is still a headway for the industry to keep going in those markets.
Sir, my last question. DTM model, I think we have added a-
Please rejoin the queue for more questions.
Yeah. Okay, sir. Thank you.
Thank you. The next question is from the line of Keshav Garg from CCIPL. Please go ahead.
Sir, firstly, our working capital days have increased from 18 days in FY 2024 to 31 days. And sir, also, are we on track to achieve 10% operating margins over the next six quarters as you had told us? And sir, also, our stock price is at 2020 COVID levels, and our market cap is almost equal to our revenue. And promoter holding is very low at 38%. Sir, so isn't it an opportune time to do a share buyback to increase shareholder wealth?
Hi, Keshav. Firstly, I won't comment on the stocks and the valuation and all. That's out of the purview of this call. Secondly, on the 10% guidance, I've just answered Dhruv on that. We remain optimistic about it. In spite, and I said in the call that what is controllable. If commodities and regulatory is not controllable. There is this whole focus on getting our cost structures or operating leverage in, and we are working on that with the one aim of getting onto the double-digit margins there. Yes, our stock prices have come down, but that's a larger impact of what's happening at a global level, what's happening with the FIIs, what's happening with the small cap and overall investor sentiment.
Sir, what about the working capital?
Yes, sure, sir.
Sir, I'm just saying we should make use of the attractive level of stock price to do a share buyback.
Thank you. Point noted. Thanks for your suggestion on that. Working capital, which largely are stock in the market, which leads to a receivable going up, which is perfect, but otherwise, there's nothing there, and which is also what we are building up. So there's not much of a gap there.
Sir, so what steady-state working capital days are you expecting going forward?
We should be in the range of 18 to 20-22, and that's the number of days that we've always kept it.
Great. Sir, thank you very much and best of luck.
Okay. Thanks.
Thank you. The next question is from the line of Nirransh Jain, , from BNP Paribas. Please go ahead.
Yeah. Hi, sir. Congratulations again on a really good set of results. Sir, my first question is again back to the inventory levels for the fans. So given that this year, anyway, the issue was higher on the TPW side, and based on our checks, also the inventory levels had been a little bit higher, especially for the ceiling fans. And in your opening comments, you mentioned that there had been a further destocking that has happened on the older ratings. So is it fair to assume that the inventory levels are even below than the normal levels, especially for the ceiling fans? Or in other way, how do you see the current channel sentiment for the upcoming summer? Do you see them stocking up or waiting for the summer recovery?
Nirransh , thank you for the question. So if you look at it, the spread between the ceiling and TPW is about 70/30. Last year, if you recall, the average temperatures in February, March, and April 2025 were higher than even 2024. So a huge amount of pent-up demand, pent-up build-up for the summers happened, and it starts first with the south. And south contributes to almost 60%, 65% of the TPW. So a huge amount of stock inventory had been built up, happened for the industry in the south, which then again went through a very consistent crash in sales over the last nine months.
So I think that's where I was mentioning, saying, "Look, the destocking happened." From an overall ceiling fan perspective, the industry has been more or less flat on the volumes, but there's been a. I think there is, because of the star rating price increase, there's been a little bit of. Towards the end of quarter for the industry, there's been a little bit of positive sentiment that trade has shown in terms of this. A lot depends on how February turns out with summers in South. Given the fact that Holi is early this time, it also is a positive indication for North and East also. So we've not got any negative sentiment from the trade as of now, and we're very optimistic about the summers turning out to be much better than last year.
If you look at over the last 10, 15 years' results of any cooling category, there's never been two years of bad summers. Just a reference point.
Sure, sir and sir, is it possible to call out the advertisement and the sales promotions for the nine months YTD?
We are at about 4.2%, 4.1% of our revenue there. We've always maintained that since we're building up different categories, we will be higher than the industry at this elevated level of about 4%, 4.5%.
Right, and those are actually my questions. It comes from the fact that if I look at last year also, the ad spends grew by like 8%. So we have already started seeing some deceleration in the ad spends. Now, obviously, this comes as a broader strategy of when the investments were front-loaded, and now we are seeing some moderation in there. But my question is that next year, for example, if the demand again recovers, do we see these ad spends as percentage of sales going back to those 4.5% levels? Or how do you see the ad spends trajectory over the next one to two years?
And this quarter, I was at 4.2% versus last year. I've done a double-digit spend on my marketing spend. So as I said, we will continue to invest because it's not just one category. We're building up a brand across different categories. So we will see slightly elevated levels. And next year, also, we intend to spend because that's where when you're building up a brand, standing for multi-categories and a premiumization you will have to do. We will have to find the right and how are we getting the right results from those? Are we picking the right channels? And that's why I specified saying we're picking up the right digital channels. We're picking up the right connected TVs. We're picking up the right segments who can talk about our brand and for us.
Right, sir. Sir, lastly, just one thing. Are we thinking about any other category specifically related to solar, or is there any thoughts behind that?
Nirransh , as soon as we finalize anything, we'll come back to you guys.
Sure, sir. Thank you so much and all the best.
Thank you, Nirransh .
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. The next question is from the line of Umang Shah from Avendus. Please go ahead.
Hi, sir. First, one second. Congratulations. I know you are tired of hearing this. But sir, my question is more related toward our projections on premiumization. So that is one main reason why I think that we really love your brand. Orient has really worked very well. Brand exposure has worked very well. So going forward, what do you think would be the additions in the SKUs that we will be looking at? Fans and lights, both if you could comment on that.
So Umang , and thanks for bringing out the brand and the color and the fact that you really like the premiumization efforts that we're doing. Premiumization, especially when you start thinking and keeping consumers at the core of it, it's a long-drawn process. We've been at it for a long time. As we move forward for the summers also, you will see some of the innovation and premium products coming in both categories of lighting and in fans. And moving forward, you will also see in some of the other categories of heating that we will have. So it's a continuous journey. Premiumization and innovation doesn't stop at one innovation or one product. You'll have to keep understanding the consumer, keep solving for the consumer needs, and work very hard. Intrinsically, your DNA has to become consumer-centric to be able to anticipate the trends, movements, and do that.
As simple as that. Last year, we picked up the trends and colors. We introduced about 40 colors, which were very liked and appreciated by the consumers as well as specifiers, so some of those things, it's a continuous journey that we are at it and we'll continue to do so.
Okay. And sir, the other way, so what would be our DTM strategy now? Do we think that we have penetrated in the existing market and that we will start looking at different markets, or we are still a long way to go for that?
No, we've always said that there's always going to be a hybrid model of MD and DTM. What are we wanting and solving for? We're saying any market where I am growing, gaining market share, improving my quality of distribution, both in terms of numeric distribution and weightage, premiumization, and engagement with the retailers, that's the market we'll continue to do. And then the route and the model doesn't matter. And we keep evaluating that. So that's the stance that we've always had. All the markets that we've done, we've seen attraction there in terms of all these parameters.
Got it, sir, and sir, I missed in between, there were questions on water heaters, so heating and cooling products. What is our strategy over there? What do you think is the optimal season that we should be aware of in terms of seasonality for growth and revenue or something of that sort?
See, if you look at it in the last few years, the weather conditions and global warming is becoming extreme. Either it's going to be extreme summers or it's going to be extreme winters. The consumers will pick for both conditions products, and we would want to be aggressive. We would want to have the same presence in both categories and solve for consumer needs from harsh seasonal variances that we're seeing, whether it's summers or it's winters. And we've seen water heaters get good traction and good response. We've seen room heaters getting a good response. And we're hopeful that we'll build these categories more and gain market share there. There's a headroom for us there in that category to gain market share as well as gain on the premiumization there.
Perfect. Great. Just to continue on the last point, so what would be the optimal mix that we will be very happy with? Currently, 50/30. Where do we think in two years, three years, down the line for that, for fans versus lighting, what mix is the optimal mix for us?
Shah, sorry, I couldn't get it, but I'm assuming you were asking what could be a B2C and a B2B mix in lighting would be an optimal revenue.
In our overall revenue, where we will be very happy, that 50/50 fans and other products?
So for us, the mix is obviously an end product and a byproduct. For us, the key thing is to see growth in my existing strong core categories much better than the industry, much better than the peers. And for my newer categories, a higher double-digit growth that we would want. So we would want to see ideally both. The mix is a fallout and an end result of that. Our key purpose is to have a secular growth across all categories, driving all categories, being seen as a consumer-centric premium brand across all SKUs that we do and across all categories that we do for the consumers. Mix is a resultant.
Okay. Got it. Very clear. Very clear, sir. Great. Thank you so much. Thank you.
Thank you, Umang.
Thank you. Ladies and gentlemen, a reminder to all, if you wish to ask a question, please press star and one. The next question is from the line of Disha from Sapphire Capital. Please go ahead.
Hello.
Yes, we can hear you. Please go ahead.
Yeah. So my question was just on the BLDC side. I think currently we're around 30%, right? And you mentioned that we're targeting to get this up to 45%. So what's the timeline there?
Disha has said BLDC. We've grown by 30% on the premium, which is a mix of BLDC, decorative, and non-BLDC premium. We're currently at over 30%. That's where we're looking at 45%. Obviously, we would want to do it as soon as possible, maybe next couple of years.
But any sort of timeline?
Take two seasons.
Okay. And what's this margin differential that we see? Because this is on the premium side. So what's the differential for the margin?
So we don't declare that because that's internal data, but it's better on BLDC and premium. And that's for most categories if you look at it. You don't call any category or SKU premium if it's not delivering a better margin than the average or the entry levels.
Right. Okay. That's it from my side. Thank you.
Thank you, Disha.
Thank you. Ladies and gentlemen, we'll take this as the last question for today, and I'll hand the conference over to Mr. Dhruv Jain for closing comments. Over to you, sir. Sir Dhruv, sir is not connected right now. We can close the call.
Yeah. So thank you, everyone. And thank you for your time and for all the encouragement and the questions, which I'm looking forward. We're very hopeful for a good summers and a good Q4. Thank you so much for the time. Thank you. Have a good day.
Thank you very much. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you all for joining us today. And you may now disconnect your lines.