Whirlpool India sinks 5% in 2 days on weak Q2 results: Here’s what brokerages say

Brokerages have trimmed earnings per share (EPS) estimates of Whirlpool India for FY24-26E owing to near-term soft demand trends and rising competition

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Investors went on a dumping spree at the Whirlpool India counter, driving the stock down 5 percent in two days, after the company reported a weak September-quarter performance. Brokerages have trimmed the earnings per share (EPS) estimates of the company for FY24-26 owing to near-term soft demand trends and rising competition.

Analysts at Jefferies have cut the FY25-26 EPS estimates of Whirlpool India by 2-3 percent factoring in Q2 misses and current weakness in business-to-customer (B2C) demand. They retained a ‘hold’ call on the stock, with a target price of Rs 1,480 per share.

“The festive demand season will be a key monitorable. In view of structural under-penetration of white goods in India, we estimate the FY23-26 sales compounded annual growth rate (CAGR) at 13 percent and forecast Ebitda margin expansion to 7.3 percent by FY26 from 6.1 percent in FY24,” the brokerage firm wrote in a post-result review note.

Also read: Indian consumer durables sector set for revival despite recent challenges, says HDFC Securities

Centrum, too, reduced the estimates by 7/4 percent for FY24/25 for Whirlpool India, maintaining an ‘add’ rating with a target price of Rs 1,625 per share. Analysts expect the company to post a 13 percent sales CAGR and 38 percent EPS CAGR on a low-base over FY23-26.

“Though strong balance sheet with negative working capital and robust cash flows will support valuation; but high competition will restrict margin profile,” the Centrum analysts said in a note.

Whirlpool India’s total revenue declined by 5.6 percent on-year in Q2FY24 due to down-pricing action taken in the early part of 2023 in a quest to regain market share. As a result, profitability of the company was impacted as well due to pricing and regulatory changes. Consolidated profit-after-tax (PAT) was down 22 percent year-on-year (YoY) in Q2FY24.

Also read: Appliances and consumer electronics sales expected to grow 20% during festivals backed by cricket fervour

Going ahead, analysts at YES Securities believe that the company will continue with its current aggressive strategy to win back the market share and further build on it. The management, they added, will continue to focus on improving profitability.

“Despite near-term demand headwinds, we continue to believe that Whirlpool India’s strong parentage and recent action of launching new products across the range and price correction in refrigerators and growth in ELICA business will bode well for the company going forward,” the brokerage firm added, sharing an ‘add’ rating for the counter, with a target price of Rs 1,840 per share.

In the past one month, the stock of this appliance maker has declined 6 percent as against 2 percent drop in the benchmark Sensex.

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