WHIRLPOOL : Took a position for about 1.25% of the capital

16 janv.

Pros:

• The company has maintained a consistently low debt to equity ratio over the last 5 years, indicating a prudent approach to financing compared to the industry average.
  
• With a current ratio well above the industry average, the company demonstrates strong liquidity, providing a solid foundation for operational needs.
  
• Foreign Institutional Investors (FIIs) and Mutual Funds have been increasing their holdings, while retailers are reducing theirs. The substantial 75% promoter holding reflects confidence in the business.
  

Cons:

• The company's revenue growth over the last 5 years has been modest, trailing behind the industry average, and post-COVID, it further slowed down.
  
• Accelerated inflation in costs has resulted in an increase in manufacturing costs, impacting the company's cost structure.
  
• Following the rise in manufacturing costs, there has been a sequential reduction in appliance demand across quarters.
  
• Unforeseen weather conditions in 2023 have added to the challenges faced by the company, potentially affecting supply chains and operations.
  
• The last 12-18 months have witnessed intense competition, putting pressure on market share and pricing strategies.
  
• New entrants attempting to scale up quickly, often driven by low pricing offers, have intensified competition in the market.
  
• Significant changes in energy and regulation norms pose challenges, necessitating potential adaptations in the company's operations.
  
• Stronger demand for premium products contrasts with reduced demand for mass products, attributable to a relative lack of growth in disposable income among semi-urban and rural populations.
  

Future Opportunities:

• The ongoing trend of rapid urbanization presents a positive factor, potentially leading to increased demand for home electronics and appliances.
  
• The ascent of the digital economy creates opportunities for the company to leverage technological trends and innovations in product development and distribution.
  
• A large untapped market provides room for growth, particularly as economic conditions improve and consumers in previously untapped regions enter the market.
  
• Future economic growth is expected to result in an increase in disposable income, potentially driving higher consumer spending on appliances.
  

In summary, alongside existing challenges, promising opportunities tied to urbanization, the rise of the digital economy, and untapped market potential exist. Anticipated economic growth and increased disposable income may support future demand for the company's products, requiring strategic planning and adaptation to changing market dynamics.

Technicals

• Took an entry for about 1.25% of the capital at a level which showed significant buyer interest in the past.
  
• Targeting the high of the parallel channel for a profit of about 24% on the invested capital. If price crashes before that then I'll be looking forward to add onto the position at the next key buying levels.

Further details will be shared underneath this post. Do check that out too.