Whirlpool of India - ZENMoney

Company Profile: Whirlpool marked it's entry into the Indian markets in the late 1980s as a joint venture with the TVS Group. It acquired the Indian refrigerator company Kelvinator India in 1995 and the majority stake in it's TVS joint venture in the next year. These two companies were merged to form 'Whirlpool India'. The company's portfolio includes refrigerators, washing machines, air-conditioners, microwave ovens and water purifiers. The company has ventured into the built-in appliances segment wherein the company markets completely imported kitchen units through specialized kitchen manufacturer and builder channels. Exports constitute 10% of the total sales of the company and the company exports it's products to Russia, Middle East, African and Latin American. In the domestic markets, the company currently commands a 15% market share in washing machines, 6% in Air Conditioner, 9% in Microwave Oven and a 17% share in refrigerators.

Strengths:

- The company is backed by a strong parent group, i.e. Whirlpool Inc., which is the largest consumer durable company in the world.

- Company was among the first in home appliances to enter home shopping channel and a significant part of its Microwave volume comes from this channel.

- The company's plans to export more products and platforms to Australia, Russia, Latin America, South East Asia etc. which is expected to increase the contribution of exports to the topline, that currently stands at 10%.

Concerns:

- Rising input costs of major raw materials (metals) and volatility in currency fluctuations are affecting the margins of the company.

- Increasing spending on advertising and promotion activities due to influx of new multinational brands are expected to add to the pressure on margins in the short term.

Outlook: The company is well positioned in white goods segment and it's huge investments made over the last year on its new launches of consumer relevant innovations across all its categories can drive the Whirlpool brand to market leadership. With the growing disposable income and moving customer choices to latest technologies, the company will be able to improve it's growth in the coming years on the back of better product mix and pricing actions both at the entry level and the high-end segment. Company's plans of long term growth in home appliances seems secured given the low penetration of appliances, especially with a huge rural market still to be tapped. Company's global pedigree and robust balance sheet, with healthy cash balance and zero debt, make it an attractive investment option for long term investors.

Source : Equity Bulls

Keywords