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WHIRLPOOL INDIA LTD

Our View:

Whirlpool of India Limited is one of the leading manufacturers and

marketers of major home appliances in the country. Q1FY20 was a

seasonally strong quarter for Whirlpool, boosted by new

product launches and expansion of their distribution network.

Also, longer summer led to better Q1 performance. Demand is

continuing to hold especially in tier-II, tier-III towns. The

electrification moves of the government with cable led to the

last village, is playing well for company as company have got

competitive products .The company’s continuous focus on

product leadership, channel expansion & sales execution has

helped it to grow ahead of industry. Along with that company

plans to invest Rs 590 Crore over next five years in capex

project like enhancing capacity which in turn will help company

to grow and strengthen its product portfolio. Also, company is

expected to benefit from corporate tax rate cut since company

was paying tax at rate of 35 % before rate cut announcement .

Presently ,stock is trading at 60.42x of TTM eps of Rs

32.30.However stock is trading at premium valuation but on

back of strong fundamentals , we recommend “BUY” on stock

with price target of Rs 2250 for long term horizon

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CMP ON 01st OCT’19 1951.65 Target 2250.00 BSE Code 500238 NSE Code WHIRLPOOL Market Cap (Rs Cr) 24760.58 52 week High/Low 1975.35/1263.40 Industry Consumer

Durables Face Value 10.00 Equity (Rs Cr) 126.87 TTM EPS 32.30 Latest Book Value 180.64 Dividend Yield % 0.27 P/E 60.42 P/B 10.80 Industry P/E 47.63

FY18 FY19 Net Sales*

4831.91 5397.65

EBIDTA* 560.00 642.17 PAT* 350.67 409.74 EPS 27.64 32.30 Book Value

138.48 165.60

Shareholding Pattern % Q1FY20 Q4FY19 Q1FY19 Promoter 75.00 75.00 75.00 FII 4.88 4.77 4.31 DII 7.78 8.24 9.07 Others 12.34 11.99 11.62

Peer Comparison (Rs Cr) (As On FY19)

Whirlpool India

IFB Inds

Crompton Greaves

Net Sales

5397.65 2659.15 4478.91

EBIDTA 642.17 125.74 584.32 PAT 409.74 71.08 401.38 OPM % 11.90 4.25 14.12 NPM % 7.59 2.14 8.93 ROE% 21.10 12.20 47.93 P/E 60.42 37.33 38.51 #Consolidated Basis

Source: ACE Equity

Demand in ConsumerDurables isincreasing on back ofrising rural income,increasingurbanisation, agrowing middle class& changing lifestyles.

Significant increasein discretionaryincome and easyfinancing schemeshave led to shortenedproduct replacementcycles and evolvinglife styles whereconsumer durables,like ACs and LCD TVs,are perceived asutility items ratherthan luxurypossessions.

Growth in demandfrom rural and semi-urban markets tooutpace demandfrom urban markets .Growth in onlineretailing is a keyfactor to reach out asa newer channel forbuyers, with increasein demand. Per capitaGDP of India isexpected to reachUS$ 3,274 in 2023from US$ 2,135 in2018.

BUY CMP 1951.65 TARGET 2250.00 LONG TERM INVESTMENT

INVESTMENTINVESTMENT

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WHIRLPOOL INDIA LTD

Company Overview Whirlpool of India Limited is a part of the world's renowned Whirlpool Group of Companies. Whirlpool Corporation, the ultimate Holding company is the world's leading manufacturer of home appliances. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir , Indesit and other major brand names in nearly every country throughout the world. Whirlpool of India Limited is one of the leading manufacturers and marketers of major home appliances in the country. The company owns three state-of-the-art manufacturing facilities at Faridabad, Puducherry and Pune. Whirlpool entered India in the late 1980s as part of its global expansion strategy. It forayed into the market under a joint venture with TVS group and established the first Whirlpool manufacturing facility in Pondicherry for washing machine category. In 1995 Whirlpool acquired Kelvinator India Limited and marked an entry into the refrigerator market as well. The same year the company also saw acquisition of major shares in TVS joint venture and later in 1996, Kelvinator and TVS acquisitions were merged to create, Whirlpool of India Limited. This expanded the company's portfolio in the Indian subcontinent to washing machines, refrigerator, microwave ovens and air conditioners.

Joint Venture

During Fy19 the Company acquired a 49% shareholding of Elica PB India Private Limited consisting of 2,368,997 equity shares of INR 10 each. Elica PB India is in the business of manufacturing and selling kitchen equipment such as kitchen hoods, hobs, built in ovens, refrigerators, built in microwave ovens, dishwashers etc. The acquisition is aligned with the Company’s strategy of expanding cooking and built-in business.

Capacity Enhancement During Fy19, the company considered certain investment proposals spread over the next 5 years for investing INR 590 crores in capex projects like enhancing capacity at Faridabad & Puducherry factory and modernization of Double Door Frost Free line at Pune factory. The above expansions will help the Company to grow and strengthen its product portfolio.

560

642.17

10.64

11.34

10.2

10.4

10.6

10.8

11

11.2

11.4

500

520

540

560

580

600

620

640

660

FY18 FY19EBIDTA (Rs Cr) OPM %

350.67

409.745.77

6.18

5.5

5.6

5.7

5.8

5.9

6

6.1

6.2

6.3

320

330

340

350

360

370

380

390

400

410

420

FY18 FY19

PAT (Rs Cr) NPM %

1796.34

2145.68

19.96

21.1

19.2

19.4

19.6

19.8

20

20.2

20.4

20.6

20.8

21

21.2

1600

1700

1800

1900

2000

2100

2200

FY18 FY19

Net Worth (Rs Cr) ROE %

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WHIRLPOOL INDIA LTD

Consumer Services Company continue to make significant progress on executing its well laid down Service Strategy. Company continue to focus on the following key Deliverables - Position Service as a competitive advantage by introducing its “Consumer Service Promise” - Strengthen systems & processes, field service network to deliver this service promise - Continue to grow accessibility & visibility of Whirlpool genuine spare parts in the after sales market. Building on company’s continued work over the last 3 years to deliver great service experience, Whirlpool took a bold step to launch its “ Consumer Service Promise” to establish Consumer Service as a differentiator. The “Consumer Service Promise” means “calling back the consumer within 2 hrs of call registration”, and “visiting consumer within 24hrs / 48 hrs of call registration” (based on consumer geographical location) in “3500 plus cities”. Execution of Consumer Service Promise has significantly improved company’s ability to resolve consumer concerns with speed & quality, which reinforces consumer confidence in Whirlpool Brand. Company continue its focus on training & development and engagement of Service Partners & Service Technicians which are core to company’s operating philosophy. The highly trained & motivated Service Technician is a key to deliver great consumer experience. Company’s Service Business continues to grow through both its Service Partner Network & Spares Parts Distribution channel.

Industry Overview Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983 in 2012. Maximum consumer spending is likely to occur in sectors like food, housing, consumer durables, and transport and communications. This increasing purchasing power coupled with higher penetration that is also being fuelled by eCommerce continues to drive growth. Demand for consumer durables in India has been growing steadily - driven majorly by rising incomes, increasing urbanisation, a growing middle class, changing lifestyles and easy financing schemes. The country has also been witnessing growth in eCommerce as a key channel for buyers. The Company has been focussed on ensuring that investments are being made strategically to secure its position as one of the strong players on this new channel. In order to meet future demand in the white goods category companies have also been focussing on expanding production and distribution facilities in India.

1.09

3.03 3.10

0

0.5

1

1.5

2

2.5

3

3.5

Washing Machine Refrigerator Air Conditioner

White Good Market In India in FY18 (US $ Bn)

4.90%

5.60%

4.00%

3.40%

2.90%

0.80%

5.50%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

FY13 FY14 FY15 FY16 FY17 FY18 FY19

Y-O-Y Growth in Consumer Durables production as per IIP

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WHIRLPOOL INDIA LTD

Launches during FY19 During FY19, along with focusing on strengthening the Company’s foothold in the mass and mass premium segments, Whirlpool ensured a notable presence in the premium segments with the launch of advanced global products that are a perfect blend of design, technology and innovation.

In order to expand the portfolio in the premium refrigerators

segment, the W-Series Global Range was launched in India. The W-Series series Refrigerators come in 2 formats - Side By Side and 4 Doors.

During the year the Company also focussed on strengthening the foothold in the Front Load Washing Machine category by increasing the brand footprint with the successful Made in Europe range of SupremeCare and FreshCare washing machines.

The Company launched its first-ever Smart Air Conditioner in India that enables users to control the appliance remotely by giving voice commands through Google Home.

2018 marked the launch of the all-new range of Purasense RO water purifiers in India. It brings to Indian households lifelong guarantee of purity with an exceptional combination of advanced technology and premium design.

Jet C Range of Convection Microwave ovens focused on addressing the need for healthy cooking options by introducing to cook fried food in ‘Zero Oil’ with crisping in just 2 minutes.

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Consolidated P&L A/c Rs Cr

Particulars FY18 FY19 Net Sales 4831.91 5397.65 Growth (%) --- 11.71 Expenditure 4271.91 4755.48 EBIDTA 560.00 642.17 Growth (%) --- 14.67 EBIDTA Margin (%)

11.59 11.90

Depreciation 101.51 111.31 EBIT 458.49 530.86 EBIT Margin (%) 9.49 9.84 Other Income 86.72 104.70 Interest 4.39 9.09 Exceptional Item 0.00 0.00 PBT 540.82 626.47 Tax 190.15 219.42 PAT 350.67 407.05 Min Int & Ass Sh 0.00 2.69 Consolidated PAT 350.67 409.74 Growth (%) --- 16.84 NPM (%) 7.26 7.59

Ratios

Particulars FY18 FY19

EPS 27.64 32.30

ROCE (%) 30.35 32.25

ROE (%) 19.96 21.10

Book Value 138.48 165.60

Debt/Equity 0.00 0.00 *: Source: Ace Equity

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Consolidated Balance Sheet Rs Cr

Particulars FY18 FY19 Sh Capital 126.87 126.87 Res & Surplus 1630.07 1974.12 Sh App/Warrants 39.40 44.39 Minority Interest 0.00 0.00 Total Debt(Long Term Short Term Borrowings)

0.00 0.00

Other Long Term Liab & Provision

163.65 198.90

Net Deferred Tax Liability

-27.90 -34.40

Sources Of Fund 1932.09 2309.88 Net Fixed Assets 478.97 551.54 Non –Current Investments

456.32 520.71

Intangible Assets 0.00 0.00 Other Non –Current Assets

114.26 141.39

Total Current Assets 2148.36 2463.71 Current Liabilities & Provisions

1265.82 1367.47

Net Current Assets 882.54 1096.24 Uses Of Funds 1932.09 2309.88

Standalone Quarterly Financial Highlights

Rs Cr Rs. Crore

Particulars Q1FY20 Q1FY19 Q4FY19 YoY% QoQ%

Total Income 1974.20 1651.08 1355.15 19.57 45.68

Total Expenses 1671.75 1407.04 1183.77 18.81 41.22

Operating Profit 302.45 244.04 171.38 23.93 76.48

Net Profit 190.84 163.79 104.10 16.52 83.32

PBIDTM % 15.32 14.78 12.65 3.65 21.11

NPM % 9.67 9.92 7.68 -2.56 25.91

EPS 15.04 12.91 8.21 16.52 83.19

Source :ACE Equity

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Standalone P&L A/c Rs Cr

Particulars FY15 FY16 FY17 FY18 FY19 Net Sales 3293.78 3439.94 3940.77 4831.91 5397.65 Growth (%) --- 4.44 14.56 22.61 11.71 Expenditure 2962.49 3056.41 3451.93 4271.91 4755.48 EBIDTA 331.29 383.53 488.84 560.00 642.17 Growth (%) --- 15.77 27.46 14.56 14.67 EBIDTA Margin (%)

10.06 11.15 12.40 11.59 11.90

Depreciation 68.13 76.93 87.46 101.51 111.31 EBIT 263.16 306.60 401.38 458.49 530.86 EBIT Margin (%) 7.99 8.91 10.19 9.49 9.84 Other Income 38.00 55.33 72.99 86.72 104.70 Interest 0.64 5.18 5.89 4.39 9.09 Exceptional Item 0.00 -0.80 0.00 0.00 0.00 PBT 300.52 355.95 468.48 540.82 626.47 Tax 90.01 115.93 157.99 190.15 219.42 PAT 210.51 240.02 310.49 350.67 407.05 Growth (%) --- 14.02 29.36 12.94 17.08 NPM (%) 6.39 6.98 7.88 7.26 7.54

Standalone Balance Sheet Rs Cr

Particulars FY15 FY16 FY17 FY18 FY19 Sh Capital 126.87 126.87 126.87 126.87 126.87 Res & Surplus 788.91 1038.83 1326.70 1630.07 1971.41 Sh App/Warrants 0.00 0.00 29.49 39.40 44.39 Minority Interest 0.00 0.00 0.00 0.00 0.00 Total Debt(Long Term Short Term Borrowings)

0.00 0.00 0.00 0.00 0.00

Other Long Term Liab & Provision

76.87 92.49 139.16 163.65 198.90

Net Deferred Tax Liability

2.44 2.95 -15.92 -27.90 -34.40

Sources Of Fund 995.09 1261.14 1606.3 1932.09 2307.17 Net Fixed Assets 395.90 402.87 427.35 478.97 551.54 Non –Current Investments

0.00 0.00 129.68 456.32 518.00

Intangible Assets Other Non –Current Assets

51.08 52.55 69.94 114.26 141.39

Total Current Assets 1401.96 1795.82 2233.24 2148.36 2463.71 Current Liabilities & Provisions

853.84 990.10 1253.91 1265.82 1367.47

Net Current Assets 548.12 805.72 979.33 882.54 957.91 Uses Of Funds 995.1 1261.14 1606.3 1932.09 2307.17

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