Whirlpool India CMP Target Rating - Spark Capitalmailers.sparkcapital.in/uploads/Apurva/Whirlpool India...Whirlpool India CMP Rs. 217 Target Rs. 281 Rating Buy 3 1960 •Whirlpool

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

1

Stock performance (%)

1m 3m 12m

WHIRL 8% 6% -10%

Sensex 8% 4% 13%

CG Index 19% 9% 16%

Financial summary (Consolidated)

Year Revenues (Rs. mn) EBITDA (Rs. mn) PAT (Rs. mn) EPS (Rs.) P/E(x) EV/EBITDA(x)

FY14E 28,429 2,018 1,152 9.1 23.9 13.0

FY15E 31,920 2,394 1,392 11.0 19.8 10.7

FY16E 36,916 3,101 1,876 14.8 14.7 8.1

COOL & CLEAN

Find Spark research on Bloomberg (SPAK <go>), Thomson First Call, Reuters Knowledge and Factset

Date Mar 20, 2014

Market Data

SENSEX 21920

Nifty 6527

Bloomberg WHIRL IN

Shares o/s 127mn

Market Cap Rs. 27.8bn

52-wk High-Low Rs. 240-124

3m Avg. Daily Vol Rs. 21mn

Index member BSE 200

Latest shareholding (%)

Promoters 75.0

Institutions 13.1

Public 11.9

Vijayaraghavan Swaminathan

[email protected]

+91 44 4344 0022

Ravi Swaminathan

[email protected]

+91 44 4344 0058

Mid-Cap Idea

Poised to benefit from a recovery in white goods market Whirlpool India (WHIRL), a 75% subsidiary of Whirlpool Corporation (US), is a leading white goods players with strong

presence in the refrigerator and washing machine market in India. WHIRL with a market share of ~15% in these two products

is also present in air-conditioners, microwave oven and premium segment of small kitchen appliances. Given its strong

parentage (~100 year old brand globally), low market penetration for its key products (Refrigerators -19%, Washers – 7%) and

possible market share gains on the back of new product launches, we believe WHRIL is well poised to benefit from a recovery

in the white goods market. Recent announcement of increase in dearness allowance to government employees (5mn of

government employees to benefit, ~Rs. 20,000 per annum per person), lower inflation and seventh pay commission are the

key catalysts which could possibly drive volume growth for the industry, in our view.

Investment rationale

• New product launches to drive volume growth and market share gains – Weak macro-economic environment has led to muted

demand for both white goods industry and WHIRL (1.3% CAGR in FY11-FY13) over the past 2-3 years. WHRIL is launching 12 new

variants (40-50 SKUs) across various products over the next 2-3 months. These product launches are focused on mass markets with

an aim to gain market share. Based on our dealer interaction, we believe WHIRL can gain market share from the competitors

• Pick up in volumes to result in margin expansion – Low operating leverage on the back of muted volume growth over the past 2-3

years has led to EBITDA margin contracting from 10.9% in FY10 to 7.9% in FY13 inspite of gross margin remaining relatively stable.

Led by possible market share gain we expect WHIRL to improve volumes, which will in-turn lead to operating margin expansion

• Export market to supplement overall growth – Exports currently contribute ~8% of total revenue (FY13) with products exported to

Australia, Europe and SAARC countries. While demand environment in the developed countries has been subdued, strong growth

observed in Nepal, Bangladesh (50% of total exports growing at 50% y-o-y) and foray into new markets (Thailand, Philippines and

MENA region) with new products are expected to contribute to incremental growth

• Strong financials with debt free balance sheet and healthy return metrics– Healthy cash generation inspite of weak demand

environment, stable and low working capital requirement (~22 days) and higher return metrics are definite positives

• Threat from Samsung is a key concern – Samsung India, backed by its strong performance in its hand held mobile segment (Rs.

180bn and Rs. 22.1bn of FY13 revenue and EBIT respectively), has increased its focus in the white goods space. We believe any

aggressive strategy adopted by Samsung in pricing/distributor margins might impact WHIRL adversely

• Valuation & Outlook – WHIRL is trading at 19x one year forward P/E, above which it has traded for ~50% of the trading days in the

past 5 years. We believe volume growth pick-up driven by new product launches and the resultant improvement in operating margins

should result in a possible re-rating . Our target price of Rs. 281 is arrived based on 19x FY16E earnings.

mailto:[email protected]

mailto:[email protected]

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

Corporate Factsheet

Company Background Incorporated in 1960, Whirlpool India Ltd (part of Whirlpool Corporation, US) is a leading manufacturer of home appliances.

Whirlpool US has annual sales of USD 18.7bn and manufactures appliances for various uses, including fabric care, cooking,

refrigeration, dishwashing, garage organization and water filtration.

Presence It caters majorly to the Indian market and derives ~8% of its sales from exports which is spread across many countries.

Management depth Mr. Arvind Uppal – Chairman & Managing Director

Mr. Arvind Uppal is a B.Tech from IIT Delhi and is a post graduate in management from the Faculty of Management Studies,

Delhi. He has over 25 years of experience in Business Development, International Marketing and General Management. Prior

to joining Whirlpool he was with Nestle in India and overseas. He is a Director in two other Indian companies, i.e. Tuscan

Ventures Private Limited, Akzo Nobel India Limited.

Business WHIRL is primarily engaged in manufacturing and trading of refrigerators, washing machines, air conditioners, microwave

ovens and small appliances which caters to both domestic and international markets. They also provide services in the area of

product development, information technology, accounting and procurement services to Whirlpool Corporation, USA and other

group companies.

Corporate Structure As on March FY13, Whirlpool India does not have any subsidiary

Revenue Model Refrigerator (61% of FY13 Revenue), Washing machine (21% of FY13 Revenue), Air conditioners (7% of FY13 Revenue) and

others (10% of Revenue);

Capacity & Facilities Three manufacturing facilities – Pune, Faridabad and Pondicherry. Both refrigerator and washing machine are manufactured

while their other products are outsourced ; 3500 dealers covering 150 towns. In FY13, Whirlpool service academy was

inaugurated primarily to improve their service standards

Key Clientele Middle income population

Key Success Factors A diverse product range (Direct cool, Frost free refrigerators, ACE semi automatic washer, 360 degree bloom automatic

washer), constant production innovation, brand strength and expanding distribution network

Credit Rating Long Term: AA-, Short Term: A1+ (CRISIL)

Corporate Bankers Citibank, N.A., The Royal Bank of Scotland, HDFC Bank Limited

Auditors S. R. Batliboi & Co. LLP, Chartered Accountants

Company Factsheet

2

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

3

1960

•Whirlpool India is incorporated and commence operations (manufacture of washing machine)

1987

•Whirlpool and Sundaram Clayton enters into a JV to form TVS Whirlpool ltd

1995 •Acquires Kelvinator India to foray into refrigerators

1996 •Whirlpool Washing Machines and Kelvinator India Ltd. merged together to form Whirlpool of India

1998 •Launches range of non-CFC frost-free refrigerators

2000

•Expands product range by launching air conditioners and microwave ovens

2004 •Enters into a distribution tie up with Faber India

2006

•Opens call centres in B class towns & non-metro cities to facilitate easy consumer access

2008

•NDTV Profit Business and Leadership Award 2008 for 'The Best Consumer Durables Company'

2009

•New range of fully automatic top load and front load washing machines, including the high capacity models, under White Magic and Professional brands

2014

• In the process of launching new range of products across all key verticals – refrigerators, washing machines and air conditioners

Whirlpool India corporate timeline Refrigerators comprise major portion of the overall revenue

Source: Company, Spark Capital Research

Refrigerators 61%

Washing Machines

21%

Airconditioners 7%

Spares & accessories

5%

Other Products 4%

Microwave Ovens

2%

Product Mix (FY13 Gross Revenue : Rs. 34.3bn)

Sluggish revenue growth from FY10 due to market share losses


-5%

0%

5%

10%

15%

20%

25%

30%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Gross Sales (Rs. mn) Gross Sales Growth (%) - RHS

Corporate timeline & Business Overview

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

4

Growth in refrigerator market has slowed over the past two years ...

Source: Industry, Spark Capital Research

Washing machine market has also witnessed similar trends ..


... on the back of slowing growth in disposable income and rising CPI

Source: CMIE, Spark Capital Research

0%

2%

4%

6%

8%

10%

12%

0%

5%

10%

15%

20%

25%

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Personal disposable Income - YoY Growth (%) CPI (%)

LG is the market leader in both refrigerators & washing machines


Whirlpool16%

Samsung17%

LG37%

Godrej12%

Others18%

FY13 Refrigerator market share (%) - Rs. 127bn

Industry Analysis: White goods market impacted by lackluster demand environment

-5%

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

FY08 FY09 FY10 FY11 FY12 FY13

Refrigerators Market Size (Rs. bn) YoY Growth (%) - RHS

-5%

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

60


Washing Machines Market Size (Rs. bn) YoY Growth (%) - RHS

Whirlpool14%

Samsung19%

LG31%

Godrej10%

IFB10%

Others16%

FY13 Washing machine market share (%) - Rs. 50bn

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

5

LG has grown at a faster pace (relative to peers) in the white goods

space ...

Source: Company, Ministry of Corporate Affairs, Spark Capital Research

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

FY10 FY11 FY12 FY13

Home appliance revenues (Rs. mn)

Whirlpool Samsung LG

... propelled by success of new product launches ...

Source: Company, Industry, Ministry of Corporate Affairs, Spark Capital Research

CompanyLaunch

PeriodProduct launched Impact

R evenue gro wth

C A GR fro m

launch

Samsung Dec'10

Launches 29 new refrigerators across

four different capacities under the Inspira

(Frost Free) or Pride (Direct Cool) rangeLow 4.0%

LG Mar'11 New range of 19 Direct Cool refrigerators High 11.2%

Whirlpool Mar'12Launches 160 models across six product

categoriesMedium 6.3%

Samsung Mar'12Launches new refrigerators and washing

machine modelsLow 3.0%

LG Mar'13Launches Power Cut Evercool

refrigeratorsHigh -

Whirlpool Mar'14

Expected to launch ~45 SKUs across key

products - Refrigerator, Washing Machine

and Air conditioners

- -

... which also got reflected in improving margins

Source: Company, Ministry of Corporate Affairs, Spark Capital Research

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

FY10 FY11 FY12 FY13

Home appliances segmental margin (%)

Whirlpool Samsung LG

• Growth in the white goods market has been muted over the past two

years on the back of falling growth in disposable income leading to weak

demand environment for refrigerators and washing machines. Subdued

replacement demand which constitutes ~30% of the overall sales has

dragged overall market growth

• Among the leading players in the refrigerators and washing machines

markets, LG with its strong success of products launched over the past

2-3 years including Evercool refrigerators has witnessed relatively better

growth compared to its peers. Margins for LG has also improved during

the same period

• Whilrlpool’s new product introduction in Mar’12 has led to 6.3% growth

in FY13 inspite of a subdued environment. With the company planning

to launch new products in the near term, we expect these launches to

drive volume growth going forward

Competition Analysis: LG has performed better in recent past, Whirlpool set to catch up

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

-

10,000

20,000

30,000

40,000

Refrigerator, two door, 200 to 350

lts, frost free

Refrigerator, one door, 200 lts and

below, Direct Cool

Washing Machine Prices - Top load,

Fully automatic, 6.1 to 7 kgs

Washing Machine Prices - Front

load, Fully automatic, 6.1 to

7 kgs

Avera

ge P

rice (

Rs.)

LG Samsung Whirlpool

6

Whirlpool is launching a new range of frost free refrigerators, twin tub washing machines and air-conditioners

Source: Company presentation, Spark Capital Research

Attractive pricing of products to give WHIRL edge over peers

Source: Compare India website, Spark Capital Research

• WHIRL is expected to launch 12 new products (~45-50 SKUs) across all

key sub-segments – refrigerators, washing machine, air conditioners

and kitchen appliances - by the end of FY14.

• Key products in the new launches include direct cool single door

refrigerators with frost free element, top load washing machine with front

load efficiency and dual exhaust fans air conditioners. At present, none

of the product range is available with its competitors

• The company is primarily targeting the ‘mid-economy’ segment and is

expected to price the products attractively (mass market) in an effort to

gain market share

• Propelled by the launch of these new products, we expect WHIRL to

growth at ~ 14% CAGR over the next two years – faster than the overall

market growth, which is expected to be ~10% CAGR during the same

period thereby gaining market share

Product Initiatives: New product launch to drive growth, product pricing gives an edge

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

7

Product exports have been broadly flat due to weakness in key markets

–Australia, Europe …


1834 1705 1823 1575 1767 1714

344 542 621

714 745 708

0%

2%

4%

6%

8%

10%

12%

0

500

1000

1500

2000

2500

3000


Exports Products (Rs. mn) Exports - Service (Rs. mn) Exports (% of Total)

Whirlpool US has led to growth in service export revenues


320 422 443

499 555 587

41 45

49 41

24

119

136

170 141 80

0

100

200

300

400

500

600

700

800


Service Exports (Rs. mn)

Whirlpool (US) Whirlpool (Europe) Whirlpool (Australia & Others)

.. but strong growth observed in SAARC countries should drive

exports

Country Commentary/Growth Activities

Nepal • >50% yoy growth observed

• Opened exclusive brand outlets

Bangladesh

• >50% yoy growth observed

• Signed up with new distributors, significantly expand retail

coverage

Sri Lanka • Strengthening market reach

Philippines • Planning to Launch Neo I-Chill Frost Free refrigerators

Thailand • Started operations with launch of Neo I-Chill Frost Free

Refrigerators

MENA Region • Expanding reach after success of Neo I-Chill Frost Free

Refrigerators in Dubai

Australia & Europe • Current market conditions remains subdued


• Product exports has been flat over the past five years on the back of

muted demand from key markets – Australia and Europe. But strong

growth observed in neighboring countries (Nepal and Bangladesh) which

currently constitutes almost half of export turnover has sustained overall

export and is expected to increasingly contribute to overall growth

• Also, WHIRL is strengthening its reach in new markets - Philippines,

Thailand and MENA region by introducing new products (Neo I-Chill frost

free refrigerators).This is expected to add to incremental growth in

exports

• Competitors, LG and Samsung have also increased focus on the export

markets on the back of challenging environment in the domestic market

• We expect strong growth in WHIRL’s exports (~8% of FY13 revenue) to

mitigate the impact of weakness observed in the domestic market

Export Markets: Growth in SAARC countries, foray into new markets to drive exports

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

8

Strong growth in Samsung’s hand held phones and tablets divisions ...

Source: Ministry of Corporate Affairs, Spark Capital Research

... has led to exponential growth in the segment’s profitability

Source: Ministry of Corporate Affairs, Spark Capital Research

-5

0

5

10

15

20

25

30

FY10 FY11 FY12 FY13

EB

IT (

Rs.

bn

)

Samsung segment-wise EBIT (Rs. bn)

Hand Held Phones Audio Visual Information Technology Software Development and Export Home Appliances

Distributor/Dealer Comments

• Overall demand for white goods has been subdued. Samsung, backed by

robust growth in the mobiles segment has turned aggressive in the

washing machine and air conditioner segments - Viveks management

(Consumer durable retail chain)

• LG is the best in terms of after sales service for white goods among the top

three players. Samsung is better in term of advertisement and promotion of

products. Whirlpool’s products are fast selling and least expensive –

George Enterprise (Consumer Durable dealer)

• Washing machines and refrigerators have witnessed 10-15% yoy price

increase over the past 18 months and has impacted sales in an already

weak demand environment – LG exclusive brand showroom

• Samsung has company representatives present in major retail stores to

push the company’s products to walk-in customers resulting in better

customer conversion rate – Girias dealer (Consumer durable retail

chain)

• Among all segments, Samsung India has witnessed strongest growth in

its hand held mobile segment over past 3-4 years (Rs.42bn in FY10 to

Rs. 180bn in FY13) primarily driven by the success of its new product

launches in smart phones

• This had lead to the segment’s EBIT increasing from Rs. 1.6bn to Rs.

22bn during the same period, with the hand held mobile segment’s EBIT

currently constituting ~92% of the overall EBIT

• Our interaction with dealers and channel partners have indicated that

Samsung India is increasing its focus to grow their white goods segment

through aggressive sales and promotion schemes

• We believe Samsung India, driven by its strong financial performance in

the mobile segment might adversely impact WHIRL’s growth

0

40

80

120

160

200

FY10 FY11 FY12 FY13

Samsung Hand Held Phones division revenue (Rs. bn)

Revenue (Rs. bn)

Samsung’s strong performance in mobile division could play spoilsport

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

9

Product-wise revenue break-up


0

10000

20000

30000

40000


Reven

ue

(R

s.

mn

)

Product-wise Revenue Break-up (Rs. mn)

Refrigerators Washing Machines Airconditioners Microwave Ovens Other Products Spares, accessories and service

Muted revenue growth has led to margin compression due to lack of

operating leverage ...


Lack of operating leverage resulted in EBITDA margin contraction


(% of net sales) FY08 FY09 FY10 FY11 FY12 FY13

Gross Margin (%) 33.8 35.8 38.6 37.1 36.4 37.4

Employee Costs (%) 7.8 7.9 7.0 7.1 8.0 8.8

Ad & Sales Promo (%) 4.9 4.5 4.8 4.8 3.3 3.1

Freight (%) 3.5 4.0 3.8 3.7 5.3 5.3

Admin & Others (%) 11.9 11.2 12.2 11.9 11.4 12.4

EBITDA Margin (%) 5.7 8.2 10.9 9.7 8.4 7.9

Royalty & Know-how payment to parent has been broadly stable


0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

-

50

100

150

200

250

300

350

400


Royalty (Rs. mn) Royalty as % of sales (RHS)

Financial Analysis: Lack of operating leverage has led to margin compression

5.7%

8.2%

10.9%

9.7%8.4% 7.9%

7.9%

9.9%

28.8%

21.9%

-1.6%4.3%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


EBITDA Margin (%) Revenue growth (%) - RHS

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

10

Capex have been for both capacity addition and new product

development


224

340

663

1,053

915

0

200

400

600

800

1,000

1,200

FY09 FY10 FY11 FY12 FY13

Capex (Rs. mn)

Cash flows have been broadly robust ...


1,839 1,881 2,053

2,170

1,440

1,151

579

922 858 687

0

500

1,000

1,500

2,000

2,500


Operating Cash flow (Rs. mn) Free cash flow (Rs. mn)

... With operating cash flow and EBITDA being similar


0%

20%

40%

60%

80%

100%

120%

140%

160%

0

500

1,000

1,500

2,000

2,500

3,000


EBITDA (Rs. mn) Operating Cash Flow (Rs. mn) OCF/EBITDA

Return metrics healthy inspite of muted growth


29.6%

46.1%

42.1%

27.1%

23.1% 22.0%

41.1% 42.0%

26.6%

22.5%

0%

10%

20%

30%

40%

50%


RoE (%) RoCE(%)

Financial Analysis: Stable cash generation and healthy return metrics in slowdown period

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

11

Going by the history, revenue growth momentum holds the key for re-rating

Trading at 19x FY15E, well below ~26x observed 1-2yrs ago

Source: Bloomberg, Spark Capital Research

18.0x

14.0x

10.0x

26.0x 22.0x

0

50

100

150

200

250

300

350

400

5 years one year forward multiple

P/E Multiple

range

No. of days

traded

% of of no. of

days

Cumulative

traded no. of

days

%of Cumulative

no. of days

12x 269 15% 269 15%

12 - 14x 70 4% 339 19%

14 - 16x 89 5% 428 25%

16 - 18x 186 11% 614 35%

18 - 20x 171 10% 785 45%

20 - 22x 220 13% 1005 58%

22 - 24x 255 15% 1260 72%

24 - 26x 229 13% 1489 86%

26 - 28x 160 9% 1649 95%

28 - 30x 92 5% 1741 100%

Total 1741 1741

Source: Bloomberg, Spark Capital Research

We expect multiples to expand as revenue growth picks up

Source: Company, Bloomberg, Spark Capital Research

-5%

0%

5%

10%

15%

20%

25%

10

12

14

16

18

20

22

24

26

28

FY11 FY12 FY13 FY14E FY15E FY16E

Average 1yr fwd P/E Revenue growth (%)

Valuation: Scope for re-rating when revenue momentum picks up

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

12

Environment, Social and Governance Analysis

Corporate Governance philosophy

• "We will pursue our business with honor, fairness, and respect for the

individual and the public at large . . . ever mindful that there is no right way

to do a wrong thing.“ – Jeff. M.Fettig, Chairman , Whirlpool Corporation

• In spite of the tough market conditions, the company and the management

have laid strong emphasis on its value transparency, integrity, honesty and

accountability in all transactions and relations

• The company’s disclosures always seek to attain best practices in

international corporate governance and endeavor to enhance long-term

shareholders value and respect minority rights in all our business decisions


Board of Directors


Name Position

Mr. Arvind Uppal Chairman & Managing Director

Mr. Anil Berera Whole Time Director

Mr. Vikas Singhal Whole Time Director

Mr. Sanjiv Verma Non-Executive & Independent

Director

Mr. Simon J. Scarff Non-Executive & Independent

Director

Mr. Anand Bhatia Non-Executive & Independent

Director

Green Initiatives & Environmental impact measures

• The company has taken various energy conservation measures across its

three manufacturing plants in Faridabad, Pune and Pondicherry and is

planning for further steps to be taken in the future to conserve energy

• Has invested in new platforms (Project Gen-Y) to introduce more energy

efficient refrigerators in Direct Cool range

• The company has started using environment friendly R-600a refrigerant in

refrigerators.

• The company has continued its focus to produce energy efficient products

and use of green gas at its Faridabad plant


Other Observations

• Three out of the six board of directors are independent directors indicating

healthy levels of supervisory positions

• Top management’s total remuneration at Rs. 75.7mn in FY13 is 3.1% of

overall employee cost (Rs. 2.4bn for ~2500 employees) which we believe

is reasonable and fairly linked to the company’s performance

• Related party transactions: During FY13, WHIRL received Rs. 587mn

from its parent Whirlpool Corporation (U.S) as product technology service

fee. Further, Rs. 121mn was received from Whirlpool Europe and other

group companies

• As on FY13, a sum of Rs. 1.8bn (29% of FY13 net worth) stood as

contingent liabilities. This pertains to disputes with tax departments, LCs

and bank guarantees outstanding


Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

13

Financial Summary

Rs. mn FY13 FY14E FY15E FY16E FY13 FY14E FY15E FY16E

Profit & Loss Growth ratios

Revenues 27,727 28,429 31,920 36,916 Sales 4.3% 2.5% 12.3% 15.6%

EBITDA 2,188 2,018 2,394 3,101 EBITDA -1.9% -7.8% 18.6% 29.5%

Other Income 237 272 313 360 PAT 3.2% -9.8% 20.8% 34.7%

Depreciation 603 633 703 763 Margin ratios

EBIT 1,822 1,658 2,004 2,697 EBITDA 7.9% 7.1% 7.5% 8.4%

Interest 30 12 15 18 PAT 4.6% 4.1% 4.4% 5.1%

PBT 1,792 1,646 1,989 2,679 Performance ratios

PAT 1,278 1,152 1,392 1,876 RoE 23.1% 17.1% 17.7% 20.8%

Balance Sheet RoCE 22.5% 16.6% 17.3% 20.4%

Net Worth 6,175 7,327 8,395 9,614 RoA 11.3% 9.3% 10.9% 13.2%

Deferred Tax 248 248 248 248 Fixed asset turnover (x) 2.9 2.7 2.7 2.9

Total debt 0 0 0 0 Total asset turnover (x) 2.0 2.1 2.1 2.1

Total Networth and liabilities 6,423 7,575 8,643 9,862 Financial stability ratios

Gross Fixed assets 9,723 10,723 11,723 12,723 Net Debt to Equity (x) (0.3) (0.2) (0.2) (0.3)

Net f ixed assets 3,886 4,253 4,550 4,786 Current ratio (x) 1.3 1.5 1.6 1.6

CWIP 263 0 0 0 Inventory and debtor days 107 104 104 104

Investments 0 0 0 0 Creditor days 86 78 78 78

Inventories 5,223 5,608 6,297 7,282 Working capital days 22 26 26 26

Sundry Debtors 1,709 2,492 2,798 3,236 Interest cover (x) 60.7 138.2 133.6 149.9

Cash and bank balances 1,550 1,297 1,819 2,446 Valuation metrics

Loans and advances 1,217 0 0 0 Fully Diluted Shares (mn) 126.9 126.9 126.9 126.9

Current liabilities 7,425 6,075 6,821 7,889 Market cap (Rs.mn) 27,531 27,531 27,531 27,531

Net current assets 2,275 3,322 4,093 5,076 EPS (Rs.) 10.1 9.1 11.0 14.8

Total assets 6,423 7,575 8,643 9,862 P/E (x) 21.5 23.9 19.8 14.7

Cash Flows EV (Rs.mn) 25,980 26,233 25,711 25,084

Cash flow s from Operations 1,440 496 1,862 2,301 EV/ EBITDA (x) 11.9 13.0 10.7 8.1

Cash flow s from Investing (735) (737) (1,000) (1,000) BV/ share (Rs.) 48.7 57.8 66.2 75.8

Cash flow s from Financing 26 (12) (340) (674) Price to BV (x) 4.5 3.8 3.3 2.9

Abridged Financial Statements Key metrics

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

14

Absolute Rating Interpretation

Buy Stock expected to provide positive returns of >15% over a 1-year horizon

Add Stock expected to provide positive returns of >5% – <15% over a 1-year horizon

Reduce Stock expected to provide returns of <5% – -10% over a 1-year horizon

Sell Stock expected to fall >10% over a 1-year horizon

Recommendation History

Date CMP Target price Rating

Not Applicable

Spark Disclaimer

Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities. Spark Capital is registered with

SEBI as a Stock Broker and Category 1 Merchant Banker.

This document does not constitute or form part of any offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This document is

provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or

financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document.

Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this

document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. This document is being supplied to you solely

for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not

directed or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,

publication, availability or use would be contrary to law, regulation or which would subject Spark Capital and/or its affiliates to any registration or licensing requirement within such jurisdiction.

The securities described herein may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this document may come are required to

inform themselves of and to observe such applicable restrictions. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction

where such an offer or solicitation would be illegal.

Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document. Spark Capital ,

its affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the

securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company

referred to in this report.

This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through the independent analysis of Spark Capital. While we

would endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information. Also, there may be regulatory,

compliance or other reasons that prevent Spark Capital and its affiliates from doing so. Neither Spark Capital nor its affiliates or their respective directors, employees, agents or representatives

shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contents or any errors or discrepancies herein or for any decisions or

actions taken in reliance on the report or the inability to use or access our service in this report or for any loss or damages whether direct or indirect, incidental, special or consequential

including without limitation loss of revenue or profits that may arise from or in connection with the use of or reliance on this report.

Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, Spark Capital has

incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:

Whirlpool India CMP

Rs. 217

Target

Rs. 281

Rating

Buy

15

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research

analyst’s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

Additional Disclaimer for US Institutional Investors

This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under the Securities

Exchange Act of 1934, as amended) only by Decker & Co, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange Act of 1934, as amended). Decker &

Co accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities discussed in the research material may do so through Decker & Co.

All responsibility for the distribution of this report by Decker & Co, LLC in the US shall be borne by Decker & Co, LLC. All resulting transactions by a US person or entity should be effected

through a registered broker-dealer in the US. This report is not directed at you if Spark Capital Advisors (India) Private Limited or Decker & Co, LLC is prohibited or restricted by any legislation

or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Decker & Co, LLC and Spark Capital Advisors (India) Private Limited is

permitted to provide research material concerning investment to you under relevant legislation and regulations;

Disclosure of interest statement Yes/No

Analyst ownership of the stock No

Group/directors ownership of the stock No

Broking relationship with the company covered No

Investment banking relationship with the company covered No

Documents

Whirlpool India CMP Target Rating - Spark Capitalmailers.sparkcapital.in/uploads/Apurva/Whirlpool India...Whirlpool India CMP Rs. 217 Target Rs. 281 Rating Buy 3 1960 •Whirlpool