Whirlpool CEO says cut stake in Indian unit due to high valuation, stock sinks to 52-week low

Whirlpool has no plans to exit the Indian market but its recent stake sale in the India unit was due to high valuations and disparity against the global parent, CEO Marc Bitzer has said.

The reassurance didn’t seem to have done much as Whirlpool India shares fell 5 percent to sink to a 52-week low of Rs 1,186 on February 27. The stock of the consumer durables company has crashed 9 percent this yea, against a 0.9 percent rise in the benchmark Sensex.

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Last week, Whirlpool Corp through its wholly-owned subsidiary, Whirlpool Mauritius, sold a 24 percent stake in the India arm, reducing it holding to 51 percent. SBI Mutual Fund emerged as the largest buyer, picking up a 7.2 percent stake, reports said.

Bitzer told CNBC on February 26 that they decided to sell a 24 percent stake as Whirlpool India valuations were at an earnings multiple of 50 times. “We are not leaving India,” he said.

“We believe in India for the long term… but if we have a business trading at 50 times multiple, and your own company trades a lot lower, it’s basically an asset arbitrage,” Bitzer said.

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Analysts at Jefferies downgraded Whirpool India to “underperform” and cut its target to Rs 1,125 from Rs 1,265 apiece. “Whirpool’s operating margins has now declined to 5 percent in 9MFY24 versus 9-12 percent in FY15-21,” the brokerage firm said.

Even Whirlpool’s management in its conference call to discuss the third-quarter results guided a high single-digit revenue growth over the medium to long term with market share gains. It also said that days of double-digit margins are over for now due to heightened competition.

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