Shares of Whirlpool of India Ltd. gained as much as 4% on Monday, February 3, after brokerage firm Kotak Institutional Equities recommended a ‘Buy’ rating on the stock. However, the brokerage cut its price target by 10% to ₹1,350 from ₹1,500 per share.CompanyValueChange%ChangeThe stock had already corrected over 50% from its peak of ₹2,450, which it hit on October 22, 2024. Kotak’s revised price target implies a potential upside of up to 15% from current levels.The decline in the stock price followed Whirlpool Corporation’s announcement of its intention to further reduce its ownership stake in the Indian unit from 51% to up to 20% by mid-to-late 2025.
After the sharp correction triggered by this announcement, Kotak sees an opportunity to ‘Add’ the stock. It said that Whirlpool of India, under the leadership of Narasimhan Eswar, has demonstrated a strong turnaround over the past 1–2 years.Current valuations (32 times one-year forward P/E; 39 times excluding other income) largely reflect margin headwinds stemming from inflation, competition, and regulatory changes, it said.Additionally, Kotak said that Whirlpool Corporation’s stake reduction is unlikely to cause significant operational disruptions, at least in the foreseeable future.
Whirlpool of India remains one of the strongest consumer durables companies in terms of working capital management, according to Kotak.Whirlpool Corporation had made the announcement alongside its quarterly earnings release and nearly a year after selling 24% stake in the Indian arm on February 20 last year.In case this does happen, Whirlpool Corporation will become a minority shareholder as its stake will drop below 26%. Whirlpool Corporation currently owns a 51% stake in the company.”Whirlpool Corporation expects to remain the largest shareholder following completion of the anticipated sell-down,” the company had said earlier.Whirlpool Corporation had sold 24.7% stake in Whirlpool India on February 20, 2024 in a deal valued at ₹4,039 crore. Shares had exchanged hands at an average price of ₹1,280 per share. The stock, with the 20% lower circuit is now trading below that level.Back then, Whirlpool Corp. CEO Marc Bitzer had cited higher valuations of the Indian unit behind the company’s decision to pare some stake. He had also said that they remain confident of the long-term business prospects in India.Whirlpool of India shares experienced a losing streak last week, declining for five consecutive sessions and shedding 33% of their value during this period. Although the stock remained in the red from Monday to Friday, the majority of the losses occurred on Thursday, when it hit the 20% lower circuit.Whirlpool of India shares are currently trading 2.48% higher on Monday at ₹1,206.70.
