According to Whirlpool CEO Marc Bitzer, the company has affirmed its commitment to the Indian market and has no intentions of exiting. The decision to divest a 24 percent stake in Whirlpool India was driven by the Indian unit’s high valuation, with earnings multiples reaching 50 times, as stated by the CEO.
Whirlpool CEO Marc Bitzer has clarified that the company has no intentions of exiting the Indian market. However, the recent stake sale in its Indian unit was prompted by the high valuations and disparity compared to its global parent company, according to Bitzer.
Despite the reassurance from Whirlpool CEO Marc Bitzer about the company’s commitment to the Indian market, Whirlpool India shares witnessed a significant decline. The shares fell by 5 percent, reaching a 52-week low of Rs 1,186 on February 27. This decline in the stock price reflects a broader trend, as the consumer durables company’s stock has plummeted by 9 percent since the beginning of the year, in contrast to the 0.9 percent rise observed in the benchmark Sensex.
Last week, Whirlpool Corp, through its wholly-owned subsidiary Whirlpool Mauritius, divested a 24 percent stake in its India arm, reducing its holding to 51 percent. Reports indicate that SBI Mutual Fund emerged as the largest buyer, acquiring a 7.2 percent stake.
In an interview with CNBC on February 26, CEO Bitzer explained that the decision to sell a 24 percent stake was driven by Whirlpool India’s high valuations, with earnings multiples reaching 50 times. He emphasized, “We are not leaving India,” reaffirming the company’s commitment to the Indian market.
“We believe in India for the long term… but if we have a business trading at 50 times multiple, and your own company trades a lot lower, it’s basically an asset arbitrage,” stated Bitzer.
Jefferies analysts downgraded Whirlpool India to “underperform” and reduced its target price to Rs 1,125 from Rs 1,265 per share. The brokerage firm highlighted that Whirlpool’s operating margins have declined to 5 percent in the first nine months of FY24, compared to 9-12 percent in FY15-21.
During its conference call to discuss third-quarter results, Whirlpool’s management projected high single-digit revenue growth over the medium to long term, along with market share gains. However, they acknowledged that the days of double-digit margins are currently over due to heightened competition in the market.
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