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Result Synopsis

Whirlpool’s consolidated revenue came 2.5% below estimates. Revenue grew 12.6% yoy. WHIRL revenue grew in double digit despite overall industry for refrigerator and washers was flattish in Q2. Revenue growth was driven by strong volume share growth in Refrigerators and Washers compared to last year as well as more premium product mix driving value growth. The company continued to gain market share in its key categories of refrigerators and washers. Gross margin has improved ~206bps yoy, while EBITDA margins at 5.1% has just seen expansion of 27bps. Higher employee costs which have risen by 28% on yoy has resulted in lower-than-expected EBITDA margin. The company will continue to focus of improving its market share profitability. Management focus is to implement actions like 1) Product innovation even at the entry level; 2) Launching new innovative/differentiated products; 3) Increasing confidence with respect to quality by providing enhanced warranty; 4) Increasing retail executive across the counters and 5) Pricing the product right. All these actions will enable the company to increase the market share and grow profitability. We believe series of steps taken by the company has been working well resulting in market share gains without compromising on the profitability. Further, company is expanding its refrigerator capacity by ~0.3mn units at its Pune plant with capex of Rs2.7bn and is expected to be commissioned by Q2FY26 which will further give Philip to growth. We continue to believe WHIRL’s initiatives, launching of innovative products at the entry level and focus on execution has started to pay dividends and will further enable it to further climb up the ladder on the market share and maintain balance between market share and profitability. We now estimate FY24-27 Revenue/EBITDA/PAT CAGR of 13%/30%/41%. We upgrade the stock to BUY with revised PT of Rs2,483 rolling forward our target multiple to FY27 estimates as WHIRL continues to gain share.

Result Highlights

* Quarter summary – WHIRL revenue growth has aided by continued demand for refrigerators and market share gains across its key category of washers and refrigerators.

* Margins – Gross margins have expanded ~206bps and ~367bps on yoy and sequential basis. EBITDA margin has expanded by just 27bps on higher employee costs which has shot up 28% yoy.

*  Capacity expansion – The company will be expanding its manufacturing capacity of its refrigerator at Pune factory. WHIRL will be adding 0.3mn units to existing capacity of 5.4mn units, which is likely to be completed by July 26.

* Market share – WHIRL has continued to gain market share. Company has witnessed market share gains for 3rd quarter in a row.

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