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The brokerage believes that the company has been adopting the right strategy by increasing its distribution in tier 3,4,5 cities and rural areas
Analysts retained their bullish view on Whirlpool after the company reported 40.84% growth in consolidated profit at Rs 130.06 crore for the fourth quarter ended March 31 on account of higher revenue from operations. The consumer durables firm had posted a profit of Rs 92.34 crore in the same period last year.
The company also reported all-time high revenue of Rs 1,779.39 crore during the March 2021 quarter, up 31.45% compared to the year-ago period.
As per management, growth momentum in the home appliances industry continues to be healthy while the company is optimistic about growth trends despite the recent challenges of commodity cost inflation and elevated Covid-19 infections in the country.
Should you buy?
While retaining ‘Buy’ on Whirlpool, brokerage Nirmal Bang Securities said, “With improved consumer sentiments, deeper penetration in small towns, Whirlpool continues to offer a structural growth opportunity for the long term along with the strongest balance sheet and cash flows in the industry.” The brokerage has set a target price of Rs 2725 for Whirlpool.
Shares of the company traded 0.79% higher at Rs 2,291 in the morning trade on Thursday. Commenting on valuations, the brokerage further added that Whirlpool is a strong financial franchise with robust cash flows, negative working capital cycle, healthy margin profile, robust return ratios and high cash and investments, which will support its premium valuation. It expects a 48% earnings CAGR over FY21-FY23E.
On the other hand, YES Securities is also positive on Whirlpool with a target price of Rs 2794. It believes that the company has strong parentage, brand presence and a well-penetrated distribution network capable of driving further market share gains.
“We believe the company has been adopting the right strategy by increasing its distribution in tier 3,4,5 cities and rural areas which should now become the next engines for the next phase of growth. Strong balance sheet, increased distribution along with faster product refreshment rate could lead to sustained outperformance in the medium term,” YES Securities said.