NEUTRAL Whirlpool of India Ltd For Target Rs. 2,332 By Yes Securities
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Result Synopsis
Whirlpool’s consolidated revenue came 7% above estimates. Revenue grew 22.5% yoy. WHIRL strong revenue growth was aided by partly strong industry growth for the summer products like refrigerator and air-conditioners and partly by market share gains in both the key categories of refrigerators and washers. WHIRL’s market share has significantly grown as compared to previous year. Gross margin has improved ~153bps yoy, however in sequential basis it has contracted by 354bps largely on account of product mix for the quarter. EBITDA margins at 8.4% is on the improving trajectory. The company will continue to focus of improving its market share profitability. Management has highlighted series of 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, management will continue to focus on execution and increasing the revenue share of the premium products which will keep the profitability intact and further enhance the markets share as it has lower share on the premium side. 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 FY24-26 Revenue/EBITDA/PAT CAGR of 16%/43%/62%. We now value the stock at 50x vs 45x as company initiatives has started to result in market share gains. We however have Neutral stance on the stock as upside is limited and it has given ~80% returns since we became positive on the company.
Result Highlights
* Quarter summary – WHIRL revenue growth has aided by strong industry growth for the refrigerators and market share gains across its key category of washers and refrigerators.
* Margins – Gross margins have expanded ~153bps on yoy basis while change in mix has resulted in sequential contraction of 354bps. EBITDA margin has expanded by 240bps on cost reduction initiatives.
* New product launches - WHIRL have been launching new innovative/differentiated products at the entry level as well and would be launching the products with keeping innovation as the key focus.
* Market share – Company has now started to gain market share from past two quarters. In Q1FY25 company has witnessed triple digit market share gains.
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SEBI Registration number is INZ000185632.
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