ICICI Securities has given a 'buy' rating on Whirlpool of India with a target price of ₹2000, implying an upside potential of 30% from the CMP.
Shares of Whirlpool of India ended at ₹1,534.50 on the BSE in Tuesday's trade, down 0.4 per cent from the previous close. At the prevailing price, the stock traded at 34.30 times its trailing 12-month EPS of ₹44.64 per share and 5.59 times its book value.
The stock is trading lower than the 30-day, 50-day, 100-day, and 200-day moving averages. Furthermore, the stock has dropped 30.15 per cent in a year and 12.32 per cent in 2022. The stock has corrected 39.41% from its 52-week high of Rs. 2,550, hit on October 12, 2021.
Whirlpool of India reported decade-low return ratios in FY22, as its PAT margin suffered a blow from input material inflation. The premium and mid-premium segments did well, but entry-level products were impacted due to the high inflationary period, said ICICI Securities.
The domestic brokerage firm in a report said the company initiated cost-saving measures and also cut advertising as a percentage of sales to protect EBITDA margins. It continued to launch a new range of innovative products in refrigerators and microwaves.
Whirlpool of India also invested in digital platforms for building the capability to deliver orders in 48 hours. Net working capital days increased from -1 in FY21 to 12 in FY22, leading to weak FCF generation. Exports remained impacted due to a steep decline in Sri Lankan sales.
"We remain structurally positive on Whirlpool given its strong brand, established competitive advantages, and steady launch of premium products," said ICICI Securities.
The company reported a decline of 35.38 per cent in consolidated net profit at ₹84.48 crore for the fourth quarter ended March as against a net profit of ₹130.06 crore during the March quarter of the previous fiscal.
For the fiscal year ended March 2022, Whirlpool of India's consolidated net profit was up 61.26 per cent at ₹567.37 crore. It had reported a net profit of ₹351.83 crore in the previous fiscal.
Whirlpool of India Ltd. is one of the leading manufacturers and marketers of major home appliances in the country. The company is primarily engaged in the manufacturing and trading of refrigerators, washing machines, air conditioners, microwave ovens, and small appliances and caters to both domestic and international markets.
An average of 16 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
