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Whirlpool of India
Key highlights of Q2-FY11 results
Whirlpool Q2FY11 performance is in line with our estimates
Net profit of Whirlpool of India has gained by 22.5% to `30.55Cr as against `24.93Cr on y-o-y basis. Sales increased by 16.33% to `628.11Cr as against `539.92Cr on y-o-y basis. The company is expecting an overall growth rate of 15-20% mainly on expansion of semi-urban markets, development of infrastructure and increase in disposable income. On half yearly basis, the turnover registered a growth of 31% to `1727Cr from `1315Cr, while PAT grew by 33% to `95Cr from `71Cr.
Margin Contraction
The EBIDTA margins declined to 9.8% v/s. 11.3% on y-o-y basic due to higher material cost. The company has increased its prices on its appliances, impact on which will be seen in next quarters.
Expansion Plans
Being a debt free company, it has plans to invest in logistics infrastructure. Going forward, to support higher volumes, the company is likely to increase the number of warehouses.
Concerns
Stiff Competition from Korean & domestic players will be a threat to maintain market share of consumer durable industry. There will be margin pressure due to higher cost of raw material. Interest hike will reduce borrowing capacity of consumer to spend on home appliances.
Outlook & Valuation
At CMP `300 stock trades at 20.6x FY11E EPS and 14.8x FY12E EPS, and P/BV of 9.8 xs and 8.2 xs for FY11E and FY12E respectively. We have a positive outlook on the company based on demand for consumer durables especially home appliances on account of increased per capita income, higher working women population & spread in semi urban markets.
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