Muted demand hits Whirlpool in Q4 but brokerages retain Buy

Even though Whirlpool India reported a 24.6 percent year-over-year fall in Q4 profit at Rs 63.7 crore, the majority of brokerages have kept their Buy rating on the company. The consumer durables stock was up 0.3 percent to Rs 1,352 at 10:30 am on the NSE.

In comparison to the same quarter last year, the company's operating revenue decreased by 2% to Rs 1,672.7 crore. Sales were down as a result of the calibrated price reduction activities and the reduced demand.

Operating margins decreased to 6.3% from 8.6% in the corresponding period, while EBITDA plummeted by 28.4% to Rs 105.6 crore. The sales drop has been explained by tepid market growth in Q4, particularly in refrigerators and air conditioners, caused by a sluggish summer and concurrently declining entry segments.

Brokerages like ICICI Securities and Yes Securities, however, continue to have an upbeat outlook on the stock. They think that higher profit margins will be achieved by increasing the share of revenue of higher-end goods and lowering input prices.

We predicted that Whirlpool will experience sales and PAT CAGRs of 15% and 37.1% over FY23-FY25E. According to the most recent analysis from ICICI Securities, "Maintain BUY with a target price of Rs 1,600."

Yes Securities is optimistic about Elica's expansion. Revenue for Elica was Rs 107.4 crore, up 11.6 percent year over year. EBITDA margin increased from 12.2 percent in Q4 FY22 to 14.7 percent in Q4 FY23.

"On the ELICA front, current portfolio development actions in the cooking category have produced positive outcomes with Elica India sales growing at double-digits with healthy margins," stated Yes Securities. It has a Buy rating and a 1,690 rupee target.

The Street, according to Nuvama Institutional Equities, is "overly optimistic in a weak market," they contend. "We cut our earnings per share estimates for the years FY24E and FY25E by 11% and 10%, respectively. As a result of the stock's high price, we lower our objective to Rs 1,200 and drop to Reduce.