it could be a good buy
Q3 FY24-
Risk- High competition, slowdown in consumer durable market.
Guidance- High single digit revenue and 7-8% margins CAGR bcz they lost market share, high competition is there and bcz durable market is not growing very fast .
Global Whirlpool Corporation has decided to sell up to 24% of its stake to reduce DEBT at group level.(Sold on 20Feb 2024- Large Red sell bar on Technical)
Refrigerators -55% of our business.
Washer - 30 percent of our business and
other categories -make up the rest.
No huge Capex plan in near future.
The improvement in profit was driven by the strong volume growth , the actions, very, very focused actions on driving the high margin premium SKUs product mix and the cost productivity supported by the strong P4G thatâs productivity for growth program which helped us save cost across most line items of the P&L, and the impact of decrease in commodity prices as well. All these things have helped both then offset the impact of price reduction, which we took at the beginning of the year, and the regulatory cost of charges on the refrigerator business, which we had to absorb in the P&L during the year
Increased our ownership in Elica India from 49% to ~87% in 2021. ** (Kitchen chimney and stove and other products)
So I think Elica is really another name for innovation in this market and cooking. Strong distribution presents, and a strong brand awareness. We are also working to establish Whirlpool as a mass premium cooking brand in the same segment so that we have two brands playing in the cooking space.
Focus on premiumization of products.(not 1-2 product but the whole category)
P4G ( productivity for growth ) program to increase productivity and growth.
From 2024 Jan, we are going to be offering a 4 year comprehensive warranty on all the semi-automatic washers that we manufacture.This will help in gaining consumer trust and increasing market share.
Large distribution network.
Change prices and strategy in last one year to gain market share.Also employed many retail executives to increase sales and PAT.
Then the product portfolio that we have. So we got a diverse product portfolio across multiple categories including refrigerators, washers, cooking, and so on and so forth. Weâve got a factory in Faridabad that basically makes refrigerators and makes semi-automatic washing machines. Weâve got a factory in Pune that makes frost free refrigerators and direct-cool refrigerators. And weâve got a factory in the south of India in Puducherry, which makes washing machines.
The revenues as well as the market shares took a beating as we went through 2022, 2023 with the result that we ended up growing revenues about 3%, but profitability dropped to about 4% by 2022, 2203, and we were losing market share quite strongly by then.
But weâre also very, very, very proud to basically get from the Honorable President of India, Shrimati, Droupadi Murmu, the Appliance of the Year for the refrigerator category at the National Energy Conservation Awards in December, 2023. And this was a moment of great pride for us. It showed the quality of the products. This was for our 215 liter DC product, the 215F model. And I think this also goes to show the quality of the products that we basically make. So that was in direct-cool refrigerators.
But with ozone refresh technology, you can actually use the ozone refresh button and we have an ozonizer in our machine, and the advantage of this is that it refreshes your clothes and removes all the odor from it without water or detergent. So this is an added feature that we give on our fully automatic washers on top of the benefits that we already serve.
Iâm glad to announce that there is a new product coming soon in the premium end of the semi-automatic category
Key focus- The first is quality, the second is cost, third is Execution. If I look at quality, we follow the world class manufacturing practices. I had already updated last time that our Pune plant got the bronze in world class manufacturing in 2021 and our Faridabad plant got the bronze in 2022. Iâm extremely happy to announce that our Puducherry plant as well as our third plant has also got bronze in October, 2023, and we will continue this March on the world class manufacturing, driving our quality more and more ahead as we go along.
If the ROI is not very clear to us, then we figure out what ROI is before we put significant amount of money behind everything. So thatâs a very simple and straightforward strategy.
Also started focusing on - Online Marketing and sales from e-com.
Changed Sales force incentive structure(Incentives are very imp- Charlie Munger),they get incentive on the basis of how much Volume and Value they are generating.
And of course, if you look at front load washing machines , again, thatâs a place where the opportunity is very, very significant for us because weâve just launched in 2022 . So as you can imagine, our shares are quite low, and therefore the opportunity to grow there is very, very significant.
So in categories where we find that we can get reasonably competitively priced products to our specifications because Whirlpool has very clear and demanding specifications, then we have no problems in outsourcing it. A classic example is air conditioners where we donât manufacture them ourselves. We get good products to our specifications, which are quite exacting, and we get that. Similarly for microwave ovens, we donât manufacture that ourselves, and we basically get that done through third party suppliers. So yes, absolutely thatâs part of the strategy.
Not focusig much on export.
Bonus- Deleveraging
Margins can reverse to mean.
First ever concall
SBI Fund bought 2% stake at Rs 1277
5 Likes
Very good morsel of information.
Parent Company Whirlpool Corp To Cut Stake Further To 20%
What is happening here ? Scrip is trading below block deal now
Whirlpool Indiaâs Parent Co To Cut Its Stake In Co To 20% By Mid Or End-2025
2 Likes
Iâm not convinced by the reasoning that Whirlpool Corp reduced its stake just to âbalance things out,â as the move seems to have done more harm than simply keeping the investment in Whirlpool India.
I was bullish on the stock based on its earnings, but given the recent news, Iâm struggling to make sense of it. If anyone can explain, Iâd appreciate it.
Disclosure: Holding 6% of my portfolio in Whirlpool India.
Heavy and continuous promoter selling is always a big overhang for any stock and in a bear market it can prove to be quite damaging as there is no really extra liquidity to absorb the excess supply. The parent of Whilrpool India is ridden with huge debt and they are looking for every possible ways to scavenge cash.
As for Whirlpool India, at an EV is at 17 times EBTIDA itâs probably the cheapest consumer stock around and I wonder why any company hasnât started thinking about acquiring it.
I started buying Whirlpool when first tranche of parent selling started last year and price came down to some 1200. Do I regret not selling it at 2400? Yes. But at 1100 it looks so cheap that there is no way I wouldnât buy more of it.
3 Likes
How does it rank on operational parameters vs a voltas, blue star and unlisted names like samsung and LG.
If promoter holding goes to 20 as indicated. Where does the push come from. Can growth stagnate in such an era.
If so whatâs the impetus for the stock. Reason I have asked is looks superb buy at current prices. Remember whirlpool sold european ops to some turkish company
2 Likes
From fundamental perspective everything checks out. Recent management commentary suggests they are gaining market share in both their prominent categories (washing machine and fridge). Consumption slow down has hurt all consumer durable players (Voltas, Havells, Crompton etc) but with recent measures in budget and easing of interest rates, discretionary consumption is expected to pick up which should bode well for all these companies including Whirlpool. Plus their brand is strong and their management has been executing well.
So I think once current selling settles down, it should start its move up.
Promoter holding doesnât have any bearing on the stock price action. There is a lot of tier-A listed companies (ITC, ICICI bank, Crompton etc) which donât have any significant promoter holdings.
1 Like
Ebitda for Fy25 should be around 510 cr and mcap is 14000 cr. can you help understand how Ev/ebitda was claculated as 16x?. Could not see Any major cash component also
2 Likes
Itâs good to have Whirlpool parent exit control . They have lost the plot globally and it was a heavy anchor that was bringing down dynamic management and.india and export market opportunities. Am move like outsourcing to PG ELECTROPLAST would be hard to take with clearances from US MANAGEMENT .
Also itâs widely reported that Bosch is making a bit for whirlpool . It may be part of that divestment as they may be getting US valuation for the India unit which was way below the listed valuation. So they have decided to offload india so that the rest of the deal can happen faster and use the money to reduce debt at parent level, raising the US valuation too ⌠so itâs a corporate strategy and I think now u will see Bosch take over of whirlpool news come to market with the residual stake in WPIL move to Bosch along with the globals sale. Itâs 20% once offloading is done which has strategic value to Bosch vs just a investment that will be disposed .
Thatâs my analysis ⌠2025 will be a year of recovery at india level and sale of whirlpool at global level to likely Bosch or another player
3 Likes
Pls correct me if wrong, Bosch recently boughy Hitachi AC IndiaâŚwill they be now interested in Whirlpool also? What makes you think Bosch maybe interested when they already bought Hitachi AC India?
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Sorry I was referring to EV/EBITDA and not mcap/EBITDA in my post.
My comments are with respect to Bosch buying Whirlpool Inc US .
Whirlpool valuation multiples are much lower than Whirlpool india, so itâs possible Wpl decided to sell the Indian sub to capture that and facilitate the sale of the US arm to Bosch or someone else who may e interested in it. Bosch interest in Whirlpool is covered in the media
Thanks. I am seeing only 2500cr cash , If we subtarct 2500cr from current mcap of 13500 Ev comes to 11000cr. Ebitda is expectded to be 510 cr, SO Ev/Ebitda coms to 21.5 times.
Am i missing something or my cash and ebitda nos are incorrect/conservative
There is other income 192 core that you also need to add to 510 which will be your EBITDA.
I just completed reading the concall.
I do not know what Whirlpool looks like globally.
Selling European ops makes sense, but why would you sell out of a fast-growing emerging economy?
For me, itâs just using a high PE environment to convert to cash. The global CFO said almost the same thing: US investors value different things. Maybe they value cash more than a high PE subsidiary that doesnât kick cash upwards.
We can probably expect higher royalties going forward. The question was asked, and no commitment was given w.r.t royalty rates.
No holdings.
The reason could be extremely high debt which can change priorities of a company especially when they could be considering putting themselves up for sale.
Increasing royalty payment requires shareholderâs approval and given the non-committal stance of the parent, it may not be easy to get this through minority shareholders who in this case are big DIIs.
1 Like
While Whirlpool has good valuations, honestly any investment in it needs to wait untill the stake sale is completed. Whether they sell to DII or to a strategic partner / competitor needs to be seen before it can be turn around. I assume that lots of competitors would want to buy some / all of Whirlpools stake but a deal does not seem to be in the offing given the current market valuations. (e.g. Bosch deal that came into news but did happen)
ICICI Securities Limited Research Report Feb 2025.pdf (416.4 KB)
There are too many ifs and buts. They wonât bring down the royalty, but they will reduce the stake till 20%. They say this will increase autonomy but refuse to discuss it in detail.
Although the valuation seems decent, I think this will script will fall more for the institutions to get in.
Definitely an avoid for another 2-3 quarters till one gets clarity.
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