Q3-FY11 earnings updates on Whirlpool of India Ltd:: Keynote

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Q3-FY11 earnings updates on Whirlpool of India Ltd.

Whirlpool of India Ltd. has reported net profit of `24.10cr for the quarter ended 31st Dec10 as against `16.16cr for the corresponding quarter last year gained by 49.1% on y-o-y basis. Sales increased by 19.1% to `600.27cr as against `504.15cr on y-o-y basis. On nine months, the turnover has registered a growth of 27.7% to `2018.41Cr from `1640.03cr, while PAT grew by 36.1% to `118.84cr from `87.30cr.

Margin Expansion

The EBDITA margin increased to 7.6% as against 6.3% on y-o-y basis due to lower raw material and employee costs. The company has also increased its prices on its appliances in last quarter which has resulted in margin expansion.

Future Plans

Being a debt free company, it has plans to invest in logistics infrastructure. Going forward, the company is likely to increase the number of warehouses with the support of higher volumes.

Concerns

Stiff Competition from peers will be a threat to maintain market share of consumer durable industry. There will be a margin pressure due to higher cost of raw materials. Interest hike will reduce consumer spending on home appliances.

Outlook & Valuation

At CMP `200.90 stock trades at 13.82x FY11E EPS and 9.91x FY12E EPS, and P/BV of 6.15x and 5.50x for FY11E and FY12E respectively. We have a positive outlook on the company and recommend’ buy’  revising target price of `304 assigning PE of 15x FY12E.