Whirlpool of India Initiating Coverage Research Report By SMIFS

Whirlpool of India Limited: Re-Iterating Strategic Focus

We initiate coverage on Whirlpool of India with a BUY rating. Strong brand recall, rising middle class population and change in consumption pattern are the major triggers for the company.

Government’s strong push on infrastructure developments, housing for all and rural electrification are some of the other tailwinds.

Investment Thesis

Vision 2020:

Whirlpool of India is aiming to double its revenue to USD1 billion by 2020 on the back of increase in revenue from non core segments, new product innovations and growing Indian economy. The company is planning to expand its manufacturing capacity in India and to invest INR182 crore in the next two years to enhance its single-door refrigerator manufacturing capacity.

Product, Technology and Distribution to drive sales

In the latest Analyst meet, the management set a positive tone by investing more in brands, refreshing product portfolio by filling the product gaps and expanding distribution network in pan-India to drive sales. With strong brand recall, the management also indicated that they are open for acquisition in order to increase the market share.

Valuation:

Backed by its parent and strong cash flow, we strongly believe that the company is on a high growth path. We assume the topline/bottomline to grow at 24%/28% CAGR over FY2017-FY2020E. The ROE is also expected to improve going forward. We value the Company assigning PE of 33.4x to FY20E EPS and arrive at a Target Price of INR1695 per share.