Whirlpool of India Q4 Review - Strong Margin Performance Coupled With Market Share Gains: Yes Securities

Yes Securities Report

Whirlpool of India Ltd.’s consolidated revenue came 5% below estimates. Revenue grew 3.7% YoY. Whirlpool of India has managed muted revenue growth, despite market for refrigerators and washers was flattish in Q4.

Whirlpool’s market share has significantly grown as compared to previous year. Gross margin has improved ~400 bps on stable raw material prices. Pricing adjustment and product mix has resulted in strong gross margins. Ebitda margins at 8.3% has surprised positively. Volume growth, strong cost productivity actions leading to better margins and improved mix of premium and high margin portfolio.

The company has guided high single digit revenue and margins over longer term. This guidance is given taking current environment into account where durables industry is facing growth challenges and competitive intensity is significantly high.

Q4 PAT was impacted by Rs 189 million loss of inventory and assets which were impacted by fire incidence at one of the company’s warehouses. The company strategy on working on preimmunizing products across the product category is starting to pay dividends which has resulted in better product mix and improved margin.

We expect Whirlpool to continue with its current aggressive strategy and win back the lost market share and then further build on it. Management will continue to focus on improving profitability in the medium term and believes ELICA can deliver longterm sustainable growth as cooking category is in the nascent stage of growth.

Despite near term demand headwinds, we continue to believe Whirlpool’s strong parentage, and recent action of launching new products across the range, taking price action in refrigerators and growth in ELICA will bode well for company going forward.

We foresee revenue growth to follow the margin improvement. We now estimate FY24-26 revenue/Ebitda/PAT CAGR of 14%/37%/55%. We continue to maintain Buy rating with target price of Rs 1,914 valuing the stock at 45 times on FY26 earnings per share.

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