The deal grants Whirlpool India exclusive rights to use the ‘Whirlpool’ brand in India and neighbouring countries, with an option to extend it by another 10 years.
Royalty rates are set at 1%-1.5% for major domestic appliances and 3% for small domestic appliances.The agreements include guaranteed minimum royalty payments ranging from $6-12 million, while actual royalties are expected to exceed FY2025 levels (royalty paid in FY2025: $8.2 million).
According to Kotak Institutional Equities, these royalty rates are reasonable compared with peers.
In addition, the company has signed:
2. A 10-year exclusive technology license agreement, with royalty rates of 0.60%, rising to 0.65% from April 2029.
3. A services agreement that includes an 18% markup on engineering and technical support costs until March 2029.
4. A transitional services agreement with Whirlpool Corporation.
5. An intellectual property assignment deed with Whirlpool Corporation.Box’s view
These agreements will ensure long-term business continuity following the parent company’s planned stake sale.
The brokerage finds the terms reasonable and expects a smooth business transition.
Kotak has cut its EPS estimates by 6-10%, factoring in continued weakness in cooling categories and some market share loss.
It has revised its fair value to ₹1,415 (valuing the stock at 33x Dec 2027E PE) and maintains an ‘ADD’ rating.
Near-term trigger
Whirlpool Corporation has announced plans to reduce its stake in Whirlpool India from 51% to 20% through a stake sale, expected in late CY2025.
The parent company plans to use the proceeds to reduce its debt.
