Whirlpool of India Ltd. is a mid-cap company in the consumer durables industry with a market worth of Rs. 19,568 crore. On the NSE the stock is currently trading at a market price of ₹1,536 whereas it had touched a 52-week-high of ₹2,550 on 12th October 2021 and a 52-week-low of ₹1,365.10 on 26th May 2022 indicating that at the current level the stock is trading at a discount of 40% from high. According to facts available on Value Research, the stock is debt-free. On the other hand, brokerage house ICICI Securities is bullish on the stock and has set a target price of ₹2000, which would represent a new high for the stock and a possible gain of 30% from its current price. ICICI Securities has said “Whirlpool of India (Whirlpool) reported decade low return ratios in FY22, as its PAT margin suffered a blow from input material inflation. The premium and midpremium segments did well but entry-level products were impacted due to high inflationary period. The company initiated cost-saving measures and also cut adspend as % of sales to protect EBITDA margins. It continued to launch new range of innovative products in refrigerators and microwaves.” “The company also invested in digital platforms for building the capability to deliver orders in 48 hours. Net working capital days increased from -1 in FY21 to 12 in FY22 leading to weak FCF generation. Exports remained impacted due to steep decline in Sri Lanka sales. We remain structurally positive on Whirlpool given its strong brand, established competitive advantages, and steady launch of premium products,” the brokerage has said. ICICI Securities has said in its note that “We model Whirlpool to report revenue and PAT CAGRs of 17.5% and 47.5% over FY22-FY24E, respectively, and RoCE to move to 13.9% in FY24 (FY22: 7.7%). We remain positive on the company’s business model due to its established competitive advantages and growth opportunities. Maintain BUY with DCF-based target price of Rs2,000 (implied P/E 48x FY24E).” Major increase in input prices and/or increase in competitive pressures will result in a downside to the estimates and any delays in launch of new products may result in lower earnings than estimated, which are the two key risks for the stock as highlighted by ICICI Securities.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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