Buy Whirlpool of India, target price Rs 2000: ICICI Securities

ICICI Securities has buy call on Whirlpool of India with a target price of Rs 2000. The current market price of Whirlpool of India is Rs 1501.35. Time period given by analyst is one year when Whirlpool of India Ltd. price can reach defined target.

Whirlpool of India Ltd., incorporated in the year 1960, is a Large Cap company (having a market cap of Rs 19020.62 Crore) operating in Consumer Durables sector.

Whirlpool of India Ltd. key Products/Revenue Segments include Domestic Appliances, Sale of services and Export Incentives for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1559.71 Crore, down -4.03 % from last quarter Total Income of Rs 1625.23 Crore and up 2.45 % from last year same quarter Total Income of Rs 1522.34 Crore. Company reported net profit after tax of Rs 44.19 Crore in latest quarter.

Investment Rationale
Revenues of Whirlpool grew only 5% in FY22, implying little to no volume growth for the company. It reported lowest EBITDA margin of 6.7% for FY22 in past decade (in-line with our estimates). Steep input inflation, increase in competitive pressures and limited price hikes (our view) resulted in this dent in profitability. The brokerage continues to believe these issues are transitory in nature and should get resolved in FY23-24. It also notes that a large opportunity in white goods offers healthy long-term growth potential to Whirlpool. While it sees a short-term impact due to steep inflation in input prices and it cuts estimates to the tune of ~4.5%, it believes the company is likely to protect market shares (even at the cost of margins) in the medium term which is DCF accretive. Growth in high EBITDA margin Elica business will also be margin accretive for the company. Maintain BUY with a DCF-based target price of Rs2,000 (implied P/E 48x FY24E).

Promoter/FII Holdings
Promoters held 75.0 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.84 per cent, DIIs 11.91 per cent.