Sell Whirlpool of India; target of Rs 1100: ICICI Securities

ICICI Securities's research report on Whirlpool of India

Whirlpool of India (Whirlpool) reported weak quarter with revenue decline of 3.8% YoY due to high base of Q2FY25, likely high inventory at beginning of the quarter and demand softness in summer products. Takeaways: (1) Channel inventory of refrigerators and RACs remains above normal level, in our view. (2) 5-week gap between to GST announcement and implementation further dents the performance in Q2FY26. (3) We believe margins were impacted due to increase in support to channel partners to liquidate the additional inventory and negative operating leverage. (4) The company has signed a 30-year brand and technology license agreement, which provides long-term brand rights, but may potentially increase royalty payments. Meanwhile, the parent company's intent to reduce its stake to 20% (it expects to announce stake sale transaction by Dec’25) continues to signal valuation overhang.

Outlook

We model Whirlpool India to report revenue and PAT CAGRs of 9.1% and 12.7%, respectively, over FY25–28E. We maintain SELL with DCF-based unchanged target price of INR 1,100 (implied target P/E of 28x FY28E EPS).