Buy Whirlpool of India; target of Rs 1511: Edelweiss

Edelweiss' research report on Whirlpool of India

Whirlpool of India (WHIRL) posted 38%/27% growth in revenue and EBITDA (beat of ~25% and PAT beat of 10%). Key highlights: a) Strong revenue growth (unlike peers) propelled by festive season sales (early Diwali) in line with our channel checks; b) Launch of new range of premium refrigerators, obedient with parent’s business strategy to augment product portfolio to plug key gaps, especially in core products like refrigerators & washing machines; and c) Investment of INR3.2bn in Whirlpool Brazil’s bonds taking total investment to INR6.45bn for H1FY18. We believe WHIRL’s strategy has already started yielding results given sustained outperformance (instilling confidence), which we expect will continue on reasonable earnings growth/free cash (24%/33% CAGR over FY17-19E) and full benefits to accrue over next 2-3 years. WHIRL remains one of our top picks in consumer durables basket given strong cash flow/earnings growth. Maintain ‘BUY/SO’ with TP of INR 1,511.

Outlook
We believe WHIRL is the best positioned MNC in high-end white goods space as it has improved its competitive profile vs large peers and is likely to sustain strong improvement in top line and OPMs. At CMP, the stock trades at 37x FY19E. For all recommendations report, click here

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