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

1月16日

Pros:

Debt to Equity Ratio:

• Over the last 5 years, the company has maintained a low debt to equity ratio of 1.73%.
  
• This is significantly lower than the industry average of 505.36%, indicating a conservative approach to financing.
  

Current Ratio:

• The current ratio over the last 5 years stands at 200.77%.
  
• This surpasses the industry average of 121.04%, reflecting a strong liquidity position.
  

Shareholding Pattern:

• Foreign Institutional Investors (FIIs) and Mutual Funds have consistently increased their holdings in the past few quarters.
  
• Retailers have been reducing their holdings, suggesting a shift of shares from weaker to stronger hands.
  
• Promoters maintain a substantial 75% holding, indicating confidence in the business and its future prospects.
  

Cons:

Revenue Growth:
Over the last 5 years, the company's revenue has grown at a modest yearly rate of 2.48%.
This is notably lower than the industry average of 9.21%, indicating slower growth in comparison.
Post-COVID, the growth has further slowed down, reflecting the broader economic impact on the consumer discretionary sector.

Manufacturing Cost Increase:
Accelerated inflation in costs has led to an increase in manufacturing costs, impacting the company's cost structure.

Appliance Demand Reduction:
Following the increase in manufacturing costs, there has been a sequential reduction in appliance demand across quarters.

Weather Conditions Impact:
Unforeseen weather conditions in 2023 have added to the challenges faced by the company, potentially affecting supply chains and operations.

Intense Competition:
Intense competition over the last 12-18 months has created additional pressures on market share and pricing strategies.

New Entrants and Pricing Strategies:
New entrants attempting to scale up quickly, often driven by low pricing offers, have intensified competition in the market.

Energy and Regulation Norms:
Significant changes in energy and regulation norms pose challenges and may require the company to adapt its operations accordingly.

Shift in Consumer Preferences:
There is a stronger demand for premium products, but demand for mass products has reduced due to the relative lack of growth of disposable income among the semi-urban and rural population.

Future Opportunities:

Rapid Urbanization:
Rapid urbanization is a positive factor that can lead to increased demand for home electronics and appliances as urban populations tend to have higher purchasing power.

Rise of Digital Economy:
The rise of the digital economy presents opportunities for the company to leverage technological trends and innovations in product development and distribution.

Untapped Market Potential:
The large untapped market potential provides room for growth, especially as economic conditions improve, and consumers in previously untapped regions enter the market.

Economic Growth and Disposable Income:
Future economic growth is expected to result in an increase in disposable income, potentially driving higher consumer spending on appliances.

In summary, while the company faces challenges, there are also promising opportunities tied to rapid urbanization, the rise of the digital economy, and the untapped market potential. Anticipated economic growth and increased disposable income in the future may further support the demand for the company's products. Strategic planning and adaptation to changing market dynamics will be essential to capitalize on these opportunities.

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.