Target: ₹1,760
CMP: ₹1,501.55
Whirlpool of India’s (WHIRL) consolidated revenues fell 4 per cent y-o-y to ₹1,710 crore due to low volumes amid soft industry demand in the beginning of Q4-FY22. The topline was below our estimate of ₹1,910 crore. However, intense summer season led to a strong comeback in March 2022.
Higher commodity cost led to decline of 330 bps y-o-y in gross margin to 32.3 per cent; however, it was up 140 bps q-o-q driven by price hikes and cost-control measures. EBITDA fell 22 per cent y-o-y to ₹150 crore leading to EBITDA margin of 8.6 per cent, down 210 bps y-o-y and below our estimate of 9.3 per cent.
Softer topline and lower operating margins led to 36 per cent y-o-y decline in PAT to ₹83.80 crore, below our estimate of ₹110 crore. We expect the growth momentum to resume in FY23 supported by intense summer season.
We expect Whirlpool to report 15 per cent revenue CAGR and 52 per cent earnings CAGR, on a low base, over FY22-24. The strong financial profile with negative NWC, strong cash flows and healthy long-term growth prospects of home appliances will support valuation.
We cut our earnings estimates by 10 per cent/9 per cent for FY23/24 and maintain Buy rating on the stock with a revised target price of ₹1,760 (₹1,925 earlier) based on 40x FY24 EPS.