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Motilal Oswal Report
Whirlpool of India Ltd.'s Q2 FY22 revenue came in flat YoY and was 11% below our estimate.
The two-year revenue compound annual growth rate stood at 7%, weaker versus peers. While demand improved in the mid and premium segments, it was impacted by supply-side volatility.
Flat revenue growth implies negative volume growth, likely in entry-level segments. This poses a risk to consumption demand and makes Q3 FY22 a key test for the same.
While the gross margin contracted 460 basis points YoY, Ebitda margin compression stood at 330 bps. Thus, Ebitda stood 29% below our estimate, with margins at 8.1% (estimate: 10.1%).
Given likely negative volume growth, we believe Whirlpool of India has started working on its cost structure – employee costs declined 6% QoQ and other expenses as a percentage of sales improved 120 bps YoY to 16%.
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