Hold Whirlpool; target of Rs 245: SPA Research

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26 Aug, 2025 12:21

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SPA Research has recommended hold rating on Whirlpool of India with a target of Rs 245, in its January 30, 2013 research report.
 
“Whirlpool of India (WPL) registered sales and PAT of INR 6,187mn (flattish YoY) and INR 101mn (down 52% YoY) respectively in Q3FY13. EBIDTA margin disappointed by registering a decline of 275bps YoY to 3.63%. The fall in margin was led by uptick in key RM like steel, copper & aluminum and higher growth in total employee cost (up 19% YoY) against revenue growth in Q3FY13. We expect sales growth to continue to remain subdued in the next quarter but expect improvement in FY14 on the back of revival in economic growth and softening of interest rates. Also, favourable product mix and expected appreciation of INR (against USD) would provide comfort on the margin front. We maintain our HOLD recommendation with a target price of INR 245.”
 
“WPL reported flattish growth in revenues of INR 6,187mn in Q3FY13, matching the overall industry trend in home appliances. The demand was impacted by lower consumer confidence amid sluggish macro-environment and sharp increases in product prices (~15-20%) in last two years. As per industry estimates, sales of home appliances grew by roughly 5% in 2012. Air conditioner sales declined around 5%, while sales of refrigerators, microwave ovens and washing machines grew 4%, 8% and 6%, respectively. Urban areas that account for ~70% of WPL's products consumption are witnessing a sharper dip in demand than rural counterparts. Going ahead, we expect sales growth to recover in FY14 on the back of (i) improvement in economic growth rate and (ii) fall in interest rates. WPL's EBIDTA margin declined by 275bps YoY and 389bps QoQ to 3.63% in Q3FY13 on the back of jump in RM cost (up 83bps YoY and 579bps QoQ) and increase in employee cost (up 19% YoY) against lower growth in revenues. Company's inability to pass on sequential increase in RM cost amid subdued economic environment dented QoQ gross margin performance. Going ahead, we expect pressure on gross margin to ebb with stabilization in RM cost. Also, expected revival in sales growth in FY14 will bring in operating leverage benefit at EBIDTA level.”
 
“Although short term economic headwinds impacted WPL's performance in FY13, we expect FY14 to see better sales growth and margins for the company. Recent policy initiatives by GOI and beginning of benign interest rate cycle are expected to push up economic growth in FY14 and revive overall demand scenario. Expected appreciation in INR (against USD) would also provide relief on the margin front as ~25% of company's products are imported. We continue to remain positive on the long term growth prospects of consumer durables sector in India and WPL's ability to leverage its positioning to capture a significant chunk of that growth. We recommend HOLD and maintain our target price of INR 245 (16x operating FY14E EPS plus INR 30/share cash surplus),” says SPA Research report.

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