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Broker’s call: Whirlpool of India (Buy)

The adverse ruling on Whirlpool Corporation by US Court of Appeals for the Sixth Circuit has no impact on Whirlpool India (WHIRL), prima facie. However, the stock fell 10 per cent yesterday and is down 27 per cent year-to-date, thus making valuations attractive (41.6x FY23 P/E).

Whirlpool provides the best opportunity in the white goods listed space owing to its strong exposure to refrigerators and washing machines v/s other listed players that are largely in a single category. It commands volume market share of 17–18 per cent in both categories where penetration stands at 30 per cent and 10 per cent respectively.

Its product portfolio is poised for strong structural growth of 12–14 per cent over the next decade — beyond the low-base-led growth due to the Covid-19 outbreak. We forecast an FY21–24 revenue/EBITDA/PAT CAGR of 16 per cent/25 per cent/28 per cent respectively.

Unlike its peers, Whirlpool did not resort to aggressive cost cutting measures in FY21. However, it has now started addressing the cost structure as reflected in employee cost and other expense trends. As and when demand recovers, we expect strong operating leverage to play out for Whirlpool. The Hindu BusinessLine

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