Whirlpool of India Ltd – Result Update: Strong BUY: Microsec

We continue to recommend Whirlpool of India Ltd a “STRONG BUY”. Whirlpool of India is the subsidiary of world’s largest consumer durables company Whirlpool Corporation, USA. The parent company is headquartered at Michigan, USA having global presence over 170 countries and manufacturing operation in 13 countries with 11 major brand names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Laden and Ignis. Diversification of products in a single segment, launching of new models and rupee appreciation/stable commodity prices to increase margins and ease pricing pressure, new stable government to lead to well balanced economy and ensure level playing field.

Valuation

The company’s P/E has been ranging between the levels of ‐3x to 24x in last ten years. Currently the industry P/E is trading at the levels of 38‐41x, much higher than the company’s P/E of 36.8x. Also, the 2‐year forward industry P/E is expected to trade at 21x as compared to company’s P/E of 12x. The Q1FY15 top‐line YoY robust growth of 19% and bottom‐line growth of 67.4% gives some signs of revival in the company’s performance with management’s active strategies mentioned above in the key highlights. Consequently, post this performance the company deserves a higher growth rate in future. Hence, we have revised the estimates on higher side. This accompanied with the above mentioned rationales has compelled us to assign a higher P/E multiple of 24x for FY16e and arrive at a target price of INR580 per share; an upside of 32% from the CMP of INR461 per share.

Download Whirlpool Q1FY15 Result Update