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Whirlpool of India - Q2FY12 - SPA

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Whirlpool of India - Q2FY12 - SPA Powered By Docstoc
					  RESULT NOTE – Q2FY12                      November 14, 2011



  Whirlpool of India
  Sensex: 17,193 CMP: INR 192 Target Price: INR 275

                                                                                                                     Consumer Durables

  Whirlpool of India (WPL) reported sales slightly lower than our expectations at INR 5,771mn, a YoY de-growth of
  2.25% in Q2FY12. On the profitability front, the company reported a decline of 53% YoY to INR 144mn at PAT
  level. Going forward, we expect company’s EBIDTA margins to witness a decline of 73bps YoY to 8.95% in FY12.
  Due to longer than expected slowdown in demand on back of high inflation and low consumer confidence, we
  revise our earning estimate downwards and reduce our FY13 end target price to INR 275.


  Sales impacted by slowdown in demand                                   the preferential shares through internal accruals. Company
                                                                         plans to incur highest ever investment on innovation and new
  Mirroring the slowdown in consumer durables industry, WPL              products in the next 2-3 years funded through internal
  sales were lower by 2.25% YoY to INR 5,771mn in Q2FY12.                accruals. Company is expected to generate free cash flows of
  This was on the back of YoY volume de-growth of 4.7%.                  INR 4,524mn in next two years resulting in cash surplus of
  However, second half of FY12 is expected to be better due to           INR 4,820mn by FY13 (cash/share of INR 38).
  festive season demand and price increases taken in the current
  quarter. Taking into account the slowdown in the industry, we          Revised Estimates
  expect sales for the FY12 to grow at 4% to INR 28,094mn.
                                                                         Change in Estimates                FY12E         Change            FY13E             Change
  EBIDTA margins to improve going ahead
                                                                         Revenue                           28,094         -2.44%           31,799             -6.22%
  WPL reported YoY decline of 255bps and 184bps in EBIDTA                EBIDTA Margins                     8.95%          +2bps           10.41%              -50bps
  margins to 6.75% and 8.86% in Q1FY12 and H1FY12                        Adjusted EPS                       11.86         -4.52%            17.32            -13.38%
  respectively. This was due to significant increase in the prices       Operating EPS                       11.13        -5.97%             15.17           -15.38%
  of key raw material resulting gross margins to decline by
  420bps YoY. Company, however, kept strict control on other             Valuation and Outlook
  operating expenditure resulting reduced impact of high RM cost
  on profitability. On the back of recent sharp fall in the prices of    WPL is a strong play on Indian consumption demand. Strong
  key commodities along with strict control on other expenditure,        balance sheet, innovative product offerings, high free cash
  we expect EBIDTA margins to improve going forward. We                  flows and return ratios make it a good long term bet. Despite
  expect company to report EBIDTA margins of 8.95% and                   subdued performance in FY12, we expect sales and
  10.41% in FY12 and FY13 respectively.                                  profitability to improve in FY13 on the back of new products
                                                                         launch and fall in raw material cost inflation. We value the
  Strong balance sheet with high cash flows                              company at 16x revised FY13E operating EPS of INR 15.2 and
                                                                         add cash per share after discounting by 15% (INR 32). We
  WPL has a zero debt balance sheet with negative working
                                                                         maintain our BUY recommendation with a target price of
  capital and high free cash flows. Company has redeemed all
                                                                         INR 275.



  Shareholding              % Holding        Key Data                                           INR Mn                FY10         FY11          FY12E       FY13E
  Promoter                        75.00      BSE Code                    500238                Net Sales             22,149   27,005            28,094       31,799
  FII                              4.46      NSE Code              WHIRLPOOL                   Growth (%)             28.83        21.92              4.03    13.19
  DII                              5.58      Bloomberg Code             WHIRL IN               EBIDTAM (%)            10.89         9.68              8.95    10.41
  Others                          14.96      Reuters Code               WHIR.BO                Adj. PAT               1,450        1,658             1,520    2,198
  Total                            100       CMP (INR)                        192              Growth (%)            105.56        14.34             -8.28    44.57
  Relative Price Performance                 No. of Shares (mn)            126.9               Adj. EPS (INR)          4.76        12.16             11.86    17.32
                                             Face Value (INR)                10.0              Oprtg. EPS (INR)       11.08        12.62             11.13    15.17
                                             M-Cap (INR bn)                24.36               P/E (x)                33.73        21.82             16.19    11.08
                                             52 week H/L                 329/191               EV/EBIDTA               8.20        12.76              8.78     5.98
                                             2Wk Ag. Vol. N SE            29,490               Net Debt/Equity       (0.17)    (0.13)            (0.46)      (0.62)

                                             Beta (1 yr Nifty)               0.99              RoAE (%)               43.17        42.01             31.72    33.37




Sumit Duseja
sumit.duseja@spagroupindia.com
                                                                                     Consumer Durables
  Quarterly Financials

  Particulars (INR mn)            Q2FY12   Q2FY11   YoY (%)    Q1FY12   QoQ (%)    H1FY12   H1FY11    YoY (%)
  Net Sales                        5,771    5,903    -2.25%     8,141    -29.1%    13,912   14,698      -5.3%

  COGS                             3,704    3,541      4.59%    5,284     -29.9%    8,987    9,278       -3.1%
  Gross Profit                     2,067    2,362    -12.50%    2,858     -27.7%    4,925    5,421       -9.1%
  Gross Profit Margins %          35.81%   40.01%   -420bps    35.10%    +71bps    35.40%   36.88%    -148bps
  Employee Cost                      489      534     -8.34%      498      -1.7%      987    1,022       -3.5%
  as a % of sales                  8.48%    9.04%     -56bps    6.11%   +236bps     7.09%    6.96%     +14bps
  Other Expenditure                1,188    1,279     -7.13%    1,517     -21.7%    2,705    2,825       -4.2%
  as % of sales                   20.58%   21.67%   -108bps    18.64%   +195bps    19.44%   19.22%     +23bps
  EBIDTA                             390      549   -29.04%       843     -53.8%    1,233    1,573      -21.7%
  EBIDTA Margins %                 6.75%    9.31%   -255bps    10.35%   -360bps     8.86%   10.70%    -184bps
  Depreciation                       110      106      3.58%      126     -12.5%      236      215        9.5%
  EBIT (excld. Other income)         280      443    -36.85%      717     -61.0%      997    1,358      -26.6%
  Other Income                        25       36    -31.02%       29     -14.1%       54        54       0.0%
  EBIT                               305      479    -36.41%      746     -59.2%    1,051    1,412      -25.6%
  Interest                            10        7     41.18%       13     -25.0%       22        22       0.0%
  EBT                                295      472    -37.53%      733     -59.8%    1,029    1,390      -26.0%
  Tax Expense                        152      167     -9.23%      223     -32.0%      374      374        0.0%
  PAT                                144      306   -53.00%       511     -71.9%      654    1,015      -35.6%
  PAT Margins %                    2.49%    5.18%   -269bps     6.27%   -378bps     4.70%    6.91%    -221bps
  EPS                               1.13     2.41    -53.00%     4.02     -71.9%     5.16     8.00      -35.6%
  Source: Company, SPA Research




  Source: Company, SPA Research




Sumit Duseja
sumit.duseja@spagroupindia.com
                                                                                                                              Consumer Durables
  Financials Standalone


   Income Statement                                                          Balance Sheet
   Y/E March (INR mn)             FY10      FY11      FY12E       FY13E      Y/E March (INR mn)                             FY10           FY11       FY12E      FY13E
   Net Sales                    22,149    27,005     28,094      31,799      Source of Funds
                                                                             Share Capital                             2,792             1,807        1,269     1,269
   Growth (%)                   28.83%    21.92%      4.03%      13.19%
   Cost of Goods Sold           13,588    16,987     18,026      19,749      Reserves and Surplus                        875             2,417        4,093     6,544
   Employee Cost                 1,554     1,907      1,964       2,239      Total Networth                            3,667             4,224        5,361     7,812
   Other Operating Expenses      4,594     5,498      5,591       6,500      Total Debt                                     2                -            -         -
   EBIDTA                        2,412     2,613      2,513       3,311      Deferred Tax Liability (Net)               (115)              210          194       261
   EBIDTA Margin (%)            10.89%     9.68%      8.95%      10.41%
                                                                             Total                                     3,554             4,434        5,555     8,073
   Depreciation/Amortization       397       445        480         519
   EBIT                          2,015     2,168      2,034       2,792
   Interest Expense                 83        56         60           64     Application of Funds
   Other Income                    234       281        282         478      Net Block                                 2,895             3,143        3,163     3,478
   EBT                           2,072     2,392      2,256       3,206      CWIP                                        136               166          392       283
   Tax Expenses                    622       732        735       1,008
                                                                             Current Assets                            8,236             9,828       10,346    14,027
   PAT                           1,450     1,660      1,520       2,198
   Adjustment to PAT                (1)       (3)         -           -      Current Liabilities & Provisions          7,713             8,704        8,345     9,715
   APAT                          1,450     1,658      1,520       2,198      Net Current Assets                          523             1,124        2,001     4,312
   Growth (%)                  105.56%    14.34%     -8.28%      44.57%      Total                                     3,554             4,434        5,555     8,073
   APAT Margin (%)               6.54%     6.14%      5.41%       6.91%




   Key Ratios                                                                Cash Flow
   Y/E March                      FY10       FY11      FY12E        FY13E    Y/E March (INR mn)                      FY10               FY11        FY12E       FY13E
   Per Share Data (INR)                                                      EBT                                 2,072.1            2,392.4       2,255.6     3,205.6
   Reported EPS                  10.03      12.18       11.86       17.32
   Adj. EPS                        4.76     12.16       11.86       17.32    Less: OI/Exceptionals                 (44.0)              79.3        117.2        296.7
   Growth (%)                  -14.28%    155.22%      -2.48%      46.08%
                                                                             Add: Depreciation                     396.8              445.1        479.7        519.0
   Operating EPS                 11.08      12.62       11.13       15.17
   Growth (%)                  100.06%     13.97%     -11.81%      36.28%    Add: Interest Paid                      82.7              56.5          60.3        64.2
   CEPS                            7.89     15.67       15.64       21.41    Taxes Paid                           (363.9)            (535.4)      (514.7)     (705.5)
   DPS                                -          -           -           -
                                                                             Working Capital (+/-)                (329.7)            (129.4)      1,020.8         2.4
   BVPS                          16.90      29.05       42.26       61.58
   Return Ratios (%)                                                         Others                                (21.1)             (96.9)           -            -
   RoACE                        37.60%     39.65%     30.29%       32.18%
                                                                             CFs from Operations (a)             1,880.8            2,053.0       3,184.6     2,789.2
   RoANW                        43.17%     42.01%     31.72%       33.37%
   RoIC                         47.54%     45.20%     35.99%       40.99%    Capital Expenditure                  (369.0)            (728.6)      (725.0)     (725.0)
   Liquidity Ratios                                                          Asset Sales                              1.0                4.0           -            -
   Net Debt/Equity               (0.17)     (0.13)      (0.46)      (0.62)
                                                                             Others                                (25.2)              48.2        117.2        296.7
   Interest Coverage Ratio       27.20      43.35       38.39       50.90
   Current Ratio                   1.07       1.13        1.24        1.44   CFs from Investments (b)             (393.2)            (676.5)      (607.8)     (428.3)
   Quick Ratio                     0.26       0.19        0.44        0.65
                                                                             Change in Equity                          -             (984.9)      (538.5)           -
   Efficiency Ratios
   Asset Turnover Ratio           1.95       2.06        2.02        1.79    Debt Raised/(Repaid)               (1,094.4)              (1.5)           -            -
   Inventory Days               102.39     121.39      118.32      100.30    Pref. Div. paid (inc. tax)           (488.7)            (408.6)       (15.8)           -
   Debtor Days                   18.28      17.23       15.41       15.82
                                                                             Interest Paid                         (59.5)             (56.7)       (60.3)       (64.2)
   Payable Days                 149.18     154.07      152.55      147.15
   Valuation Ratios                                                          CFs from Financing (c)             (1,642.6)          (1,451.8)      (614.6)       (64.2)
   P/E (x)                       33.73      21.82      16.19        11.08
                                                                             Net Change (a+b+c)                   (155.0)             (75.3)      1,962.2     2,296.7
   P/BV (x)                        9.51       9.13       4.54         3.12
   P/CEPS (x)                    20.36      16.93      12.28          8.97   Opening Cash                          719.8              564.8        489.5      2,451.7
   Dividend Yield (%)            0.00%      0.00%      0.00%        0.00%    Closing Cash                          564.8              489.5       2,451.7     4,748.4
   EV/Net Sales (x)                0.89       1.23       0.79         0.62
                                                                             Add: Margin Money                       57.0              41.4          36.8        71.2
   EV/EBIDTA (x)                   8.20     12.76        8.78         5.98
                                                                             Net Closing Cash                      621.8              530.9       2,488.5     4,819.6




Sumit Duseja
sumit.duseja@spagroupindia.com
                                                                                                                                                 Consumer Durables


  Girish Bhutra                   Head of Equity                            girish.bhutra@spagroupindia.com                                 Tel.: +91-22-4289 5600 Ext.634

  Sharad Avasthi                  Dy Head - Equity Research                 sharad.avasthi@spagroupindia.com                                Tel.: +91-33-4011 4800 Ext.832




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Sumit Duseja
sumit.duseja@spagroupindia.com

				
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