Whirlpool of India

Whirlpool of India, is the subsidiary of Whirlpool Corporation, the Worldas No.1 Home Appliance Company. It is primarily engaged in the manufacture of Refrigerators, Washing Machines, Air Conditioners, Microwave Ovens and small appliances and caters to both domestic and international markets. It also provides services in the area of product development and procurement services to Whirlpool Corporation, USA and other group companies.

1). Whirlpool of India enjoys the highest margins compared to its peers and also within Whirlpoolas global operations as the company is focused on cost control and innovation.

2). Company has a good return on equity (ROE) track record: 3 Years ROE 59.99%

3). Company is virtually debt free.

4). It hit a 52 Week High after reporting a record quarterly profit of Rs 64.6 crore for the quarter ended June 30, 2012 on account of better sales across all segments.

5). What drew my attention was that management is not paying dividends despite earning Healthy Profits. The reason for this could be the high ROE it earns

ROE (source Screener.in)

10 years : 60.30 %

5 Years : 61.22%

3 Years : 60%

Graham says that if the company can earn more money through re-investment then it is worth not giving any dividend to investors.

This view was also strengthened by the fact that company plans to invest more than Rs 750 crore in India over three years, with more than half of it earmarked for innovation, as it targets market leadership in the country. Refer Link http://timesofindia.indiatimes.com/business/india-business/Whirlpool-eyes-top-slot-in-home-appliances-market/articleshow/16473380.cms

  1. Sales Growth has been around 11 % for 3 years, 5years and 10 years. Sales for Mara12 stood at 2658 Crores. The Market Cap at 3248 Crores Thus Market cap to sales is at 1.23 %

With such compelling ratios, I think it definitely deserves a look.

Nirmal Bang has also come up with a research report on Whirlpool (http://www.valuenotes.com/uploads/article_pdf/nirmal_Whirlpool_21Jun12.pdf)

Looking forward to views of Valuepickrs.


Rudra’a post on Whirlpool. As usual excellent and informative post.


Well I guess Rudra’s post is also optimistic on whirlpool. Definetely worth a look. Would request senior valuepickrs to comment

It has already been a turaround and a 12-bagger from 2009 lows of Rs 22 . I see A/C business as the next big thing , with global warming and rising temparatures and cold-storage requirements for preservation of food items and also the fact that A/C is still consiered a luxury in India, so the potential is huge . I don’t see whirlpool giving Samsung and LG a good competition in this segment.

EPS growth of 100%. NP doubled to 28 crores from 14 crores. Margin has improved from last year.

However the margin seems to be around 3.7% which should improve from hereon as the festive quarter comes.

Whirlpool results


Thanks Krishna,

The company earned 28.38 Cr profit on a top line of 633.24 Cr (Net) meaning a margin of 4.48%

Other encouraging signs are:

increase in other income to 7.28 Cr from 6.07 Cr (QoQ) and 2.49 Cr (YoY)

increase in trade payables from 514 Cr to 626 Cr

decrease in trade receivables from 137 Cr to 112 Cr

increase in cash & cash equivalents from 85.9 Cr to 218.2 Cr

Thanks rudra for correcting me. I calculated the margins on the Gross revenue of 750 crores. Anyway looks decent set of results and when the margin increases, we can expect better appreciation in share price.

A big thanks to You Krishna,

it was the initial discussion with you that got me really interested on this. The returns may or may not pan out as expected, it will only be proved in hindsight later.

But to base your investment on a hypothesis, and see it slowly unfold is satisfying to say the least.

Would love to have other senior boarders point some serious loopholes on this as an investment theme.

Coming specifically to the q2 fy 13 results

quarter q2 fy 13 f2 fy 12

sales 611 551

op profit 31.86 28

OPM 5.21 5.08

other income 7.28 2.49

tax paid 10.21 15.15

net profit 28.38 14.36

just look at the highlighted parts of other income and tax paid and you will know the reason for the higher net profits.

OPM has shown only marginal improvement.

What is heartening is the cash balance of close to 200 crores for half year ended fy 13.

Advance sorry for being asking apparently dumb question. I find few link missing when tried to get the whole picture of whirlpool, and hence not invested in it. Here are my queries.

1). WPIL has impressive 60% ROE number for last few years. With zero debt, and such high ROE, EPS should be growing at very high rate and hence should be a huge wealth creator, which is not the fact. I think I am missing something

2). Anyone has done any analysis on expected EPS in future and hence expected price target of WPIl (say 1yr and 2yr)? That will help us understand how margin improvement will reflect in EPS number and share price movement.

Trapped in a whirlpool!
Q3/Fy-13 Results out…

Total Income Flat at 618.7 Cr v/s 617.37
EBIDTA DOWN 43% to 22.45 Cr from 39.38 Cr.
Net Profit DOWN 52.4% to 10.07 Cr from 21.15 Cr.

EBIDTA margin is 3.6% v/s 7.5% (SQ-12) and 6.4% (DQ-11)
NET Profit margin is 1.6% v/s 4.5% (SQ-12) and 3.4% (DQ-11)

Total Raw material costs as a %ge to Income is 65.4% v/s 59.7% (SQ-12) and 64.6% (DQ-11)
Employee costs to Income is 9.6% v/s 9.4% (SQ-12) and 8.1% (DQ-11)
Other expenses to Income is 21.4% v/s 23.5% (SQ-12) and 21% (DQ-11)

Tax Rate 18.3% v/s 26.5% (SQ-12) and 29.4% (DQ-11)

9M/Fy-13 v/s 9M/Fy-12:
Total Income up 6.8% to 2145.89 Cr from 2008.56 Cr (Fy/11-12: 2657.94 Cr)
EBIDTA up 5% to 170.84 Cr from 162.64 Cr (Fy/11-12: 223.09 Cr)
Net Profit up 19% to 103 Cr from 86.58 Cr (Fy/11-12: 123.73 Cr)

Reported 9-month EPS 8.12 v/s 6.69 (Fy/11-12: 9.62)
Recorded TTM diluted EPS: Rs. 11.05

At 03 pm on 28/01/2013, stock on BSE trading at Rs. 240.50/- DOWN 9%

Leaving aside the quarterly earnings’ disappointment, the question to ask is whether the company has any moat. The ratios may lead you to that conclusion but with Korean companies(LG and Samsung)lurking out there, think that is a fallacy. Whirlpool appears to me quite like Hero moto corp where the ratios and past record look quite enticing but a proper analysis of competitive landscape of motor cycles businessleads you to conclude that it is a value trap.

Anyone still following up this company? Very good numbers announced by the company for the 4th Quarter.

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If any one is tracking this company, is this company a clear case of promoter riding on to retail individual investors?
Rationale -
Company has net cash of 1050cr . Out of cash flow of 350cr last year, they gave dividend of 45cr net (3 ruppes per share). The company is debt free.
When asked about dividend declaration, they said that they need money for investments and acquisitions.
Following are the places where they invested money.

  1. 137.12 cr in Whirlpool Corporation senior notes. I am pretty sure they must not been getting more than 3-4% dollar returns. It has a lock in period of 3 yrs. Note that rupee has appreciated since November 2016 (When they invested in the parent).
  2. 350 cr in Whirpool S.A. Brazil (Subsidiary of parent). When asked the rationale, management said they will be getting better returns than bank FD. He did not disclose the return rate and contradicted his statement of needing money for expansion. This also has a lock in.

Note 4

@ashwinidamani _ tagged you here for more understanding of corporate governance. I respect your analysis.


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As per the latest annual report they are earning 3.8% on these loans. This cash was better invested in risk free govt securities yielding a better return of maybe 7.75%. I believe it would have made better sense had Whirlpool India been allotted equity for in these companies making it a partner in profits/losses to these companies’ operations rather than earning a steady and low return on these investments. As per the Mar18 annual report the interest earned was also not paid and was appearing on the balance sheet. Dont know about the intervals on which the interest will be paid.

This doesnt seem like a just application of funds to me and this is another case of a company benefitting other group companies at expense of small shareholders.

Disclosure : Invested

and yet you are invested :stuck_out_tongue:
I missed the bus in this but I sleep happily by buying a management who is shareholder friendly :slight_smile:


I was going through the parent entity (Whirlpool Corp)
As of 20 Aug 2019, the market cap was c60,000 crores and net debt of c.50,000 crores, making EV of c.110,000 crores
Wheres Indian entity’s mcap. is c.19000 crores and has net cash of c,1,000 crores

Parent entitiy at consolidated level is degrowing and has huge debt. Basically financial situation is not good at the Parent level
It seems only Indian entity is growing at 15% rate

There are chances that Parent will extrarct much from the Indian entity

Disc: Not Invested

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I believe we shouldn’t be dismissive of Whirlpool Ltd. based on this single incident.

Lets do a simple math.

They have invested total 48411 lacs in 3.8% yielding loans of the Ultimate Holding and Fellow Subsidiary Company. Had they invested this sum in a risk free govt securities yielding 7.8%, then they could’ve earned ~ 2000 lacs more in interests.

But we need to see that the Ultimate Holding company charges less than 1% in royalty, whereas for many MNC listed companies the royalty goes up to 5% of the total standalone revenue. [For example, Nestle Parent charges 4.5% as royalty].

According to latest AR, the royalty amount was 5080 lacs, which is 0.92% of the standalone total revenue of 550235 lacs.

So, theoretically, They could’ve simply issued 7.8% yielding loans to the Indian subsidiary after raising the royalty amount by 35 bps, taking the royalty to ~1.25%, resulting in the same outcome for the Indian subsidiary, and we wouldn’t have bothered a bit.

Feel free to point out any flaws in the reasoning.


There is something called doing the right thing. Stealing is wrong. Period. Similarly the choice to increase royalty makes sense if they deserve it. It is like a chief minister in India taking 1 rupee salary but stealing say around10 lakhs (which is his salary). Will you accept it? Sending money to subsidiary at substandard returns and higher risk is outright bad. We don’t need to praise their genorisity in taking less through royalties. Nestle is spending more on the parent’s side R&D and offer the product to indian subsidiary. Whirlpool should not be compared with Nestle unless what they offer in value is very similar.