Whirlpool of India Q2 FY26: Sharp Profit Decline Amid Seasonal Weakness

The stock, trading at ₹1,375.00 as of November 04, 2025, has declined 0.10% in the latest session. Over the past year, Whirlpool India has underperformed significantly, delivering a negative return of 31.10% compared to the Sensex's positive 5.94% return, resulting in a negative alpha of 37.04 percentage points. The company's struggles reflect broader challenges in the consumer durables space, compounded by seasonal demand fluctuations and margin pressures.

Financial Performance: Seasonal Weakness Takes Heavy Toll

The second quarter of FY2026 witnessed a dramatic deterioration across key financial metrics for Whirlpool of India. Net sales in Q2 FY26 declined 32.28% quarter-on-quarter to ₹1,647.27 crores from ₹2,432.32 crores in Q1 FY26, marking the lowest quarterly revenue in the past seven quarters. Year-on-year, sales contracted 3.84% from ₹1,712.99 crores in Q2 FY25, indicating both seasonal weakness and challenging market conditions.

Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) collapsed to ₹57.82 crores in Q2 FY26, representing a sharp decline from ₹211.13 crores in the previous quarter. The operating margin (excluding other income) compressed to a concerning 3.51%, down from 8.68% in Q1 FY26 and 5.08% in Q2 FY25. This marked the lowest operating margin recorded by the company in the past seven quarters, highlighting significant profitability challenges.

The profit after tax margin contracted sharply to 2.54% in Q2 FY26 from 6.01% in the preceding quarter, reflecting the severe margin compression. Profit before tax stood at ₹57.50 crores, down from ₹196.44 crores in Q1 FY26. Notably, other income of ₹49.83 crores represented a substantial 86.64% of operating profit before other income, indicating that non-operating income played an outsized role in supporting profitability during the quarter.

Employee costs remained relatively stable at ₹214.58 crores in Q2 FY26 compared to ₹221.14 crores in Q1 FY26, suggesting that the margin compression was primarily driven by operating leverage challenges and potentially higher input costs rather than wage inflation. The gross profit margin declined to 6.64% from 10.28% in the previous quarter, indicating pricing pressures and unfavourable product mix dynamics.

Operational Challenges: Margin Compression and Profitability Concerns

The operational performance in Q2 FY26 reveals significant challenges facing Whirlpool India. The company's return on equity (ROE) stands at an average of 8.31%, which is notably below the peer average and indicates suboptimal capital efficiency. This weak ROE reflects the company's struggle to generate adequate returns for shareholders despite its market leadership position in the home appliances sector.

Return on capital employed (ROCE), however, presents a more favourable picture at 21.25% on average and 23.21% for the latest period. This suggests that the company is reasonably efficient in deploying its operational capital, though the gap between ROCE and ROE indicates a relatively thin equity base supporting the operations. The company maintains a debt-free balance sheet with negative net debt, which provides financial flexibility but also means that the low ROE cannot be attributed to high leverage.

The balance sheet remains relatively healthy with shareholder funds of ₹3,949.78 crores as of March 2025, up from ₹3,688.60 crores in March 2024. The company carries zero long-term debt, positioning it as a net cash company with strong financial stability. Current assets of ₹4,627.68 crores comfortably exceed current liabilities of ₹2,176.09 crores, providing adequate working capital cushion.

Fixed assets stood at ₹1,643.54 crores as of March 2025, down marginally from ₹1,708.71 crores in the previous year. The company generated operating cash flow of ₹571.00 crores in FY2025, demonstrating its ability to convert profits into cash despite operational challenges. Closing cash and cash equivalents stood at ₹2,557.00 crores, providing substantial liquidity buffer.

Industry Context: Navigating a Challenging Consumer Durables Landscape

Whirlpool of India operates in the electronics and appliances sector, where it holds the position as the second-largest company by market capitalisation. The company manufactures and markets major home appliances including refrigerators, washing machines, air conditioners, microwave ovens, and small appliances, catering to both domestic and international markets.

The consumer durables industry in India faces multiple headwinds, including seasonal demand fluctuations, intense competition, and pricing pressures from both organised and unorganised players. The second quarter typically represents a seasonally weak period for appliance sales, falling between the summer peak (Q1) and the festive season (Q3), which explains part of the sequential revenue decline.

Over the long term, Whirlpool India has demonstrated modest growth, with sales expanding at a compound annual growth rate of 9.26% over the past five years. However, operating profit (EBIT) growth has lagged significantly at just 3.38% annually over the same period, indicating persistent margin compression and profitability challenges. This divergence between revenue growth and profit growth signals structural issues in the business model that require management attention.

Peer Comparison: Valuation and Performance Metrics

When compared to its peers in the electronics and appliances sector, Whirlpool India's financial metrics present a mixed picture. The company's price-to-earnings ratio of 49.04x is lower than the peer average of approximately 68x, suggesting a relative valuation discount. However, this discount appears justified given the company's weak return on equity of 8.31%, which trails peers such as Blue Star (16.74%), Havells India (15.21%), and Crompton Greaves Consumer (20.83%).

Whirlpool India's price-to-book value ratio of 4.42x sits in the middle of the peer range, below high-growth players like Blue Star (12.70x) and Amber Enterprises (12.03x) but above Havells India (1.07x). The company's dividend yield of 0.36% is the lowest among its peers, with Crompton Greaves Consumer offering nearly three times that yield at 1.06%. This reflects the company's conservative dividend policy, with a payout ratio of just 17.67%.

All major peers maintain net cash positions (negative debt-to-equity ratios), indicating that strong balance sheets are a sector characteristic rather than a unique competitive advantage for Whirlpool India. The company's relative underperformance in ROE despite comparable financial leverage suggests operational inefficiencies or strategic challenges that differentiate it from better-performing peers.

Valuation Analysis: Discount Reflects Weak Fundamentals

At the current market price of ₹1,375.00, Whirlpool India trades at a price-to-earnings ratio of 49.04x based on trailing twelve-month earnings. Whilst this appears elevated in absolute terms, it represents a discount to the industry average P/E of approximately 50x. The company's PEG ratio of 2.59 suggests that the stock is expensive relative to its growth prospects, with the market pricing in growth expectations that may be difficult to achieve given the company's historical 9.26% sales CAGR and 3.38% EBIT CAGR.

The enterprise value to EBITDA multiple of 27.15x and EV/EBIT of 43.97x indicate that the stock trades at a premium to historical averages, despite recent operational challenges. The price-to-book value of 4.42x appears reasonable given the company's asset-light business model and brand value, though it reflects limited confidence in the company's ability to generate superior returns on equity.

The valuation grade has recently been upgraded to "Attractive" from "Fair" as of November 03, 2025, following the sharp stock price correction from its 52-week high of ₹2,120.10. The current price represents a 35.14% decline from that peak, bringing valuations to more reasonable levels. However, the "Attractive" valuation grade must be viewed in context of deteriorating fundamentals and negative earnings momentum.

The stock's 52-week low of ₹899.00 provides a reference point for downside risk, with the current price representing a 52.95% premium to that trough. Given the ongoing margin pressures and weak operational trends, further downside remains possible if the company fails to demonstrate improvement in coming quarters.

Shareholding Pattern: Stable Promoter Base, Mixed Institutional Activity

The shareholding pattern of Whirlpool of India has remained relatively stable over recent quarters, with Whirlpool Mauritius Limited maintaining a consistent 51.00% promoter stake since at least September 2024. This stable promoter holding provides governance continuity and signals long-term commitment from the parent company, though it also means limited scope for further promoter buying to support the stock.

Foreign institutional investor (FII) holdings have shown a gradual increasing trend, rising from 9.48% in September 2024 to 11.12% in September 2025. The most recent quarter saw FII holdings increase by 0.83 percentage points, suggesting some international investor interest despite the company's operational challenges. However, FII participation remains relatively modest at just over 11%, indicating limited enthusiasm from global institutional investors.

Mutual fund holdings have declined from 28.95% in September 2024 to 25.69% in September 2025, with a sequential decrease of 0.54 percentage points in the latest quarter. This reduction in mutual fund exposure signals waning domestic institutional confidence, likely driven by the company's deteriorating financial performance and weak earnings trajectory. The presence of 28 mutual funds holding the stock indicates reasonably broad domestic institutional participation, though the declining trend is concerning.

Insurance companies hold 2.23% of the equity, up from 1.94% in the previous quarter, whilst other domestic institutional investors (DIIs) maintain a minimal 0.57% stake. Non-institutional holdings stand at 9.39%, down from 9.96% in the previous quarter. Overall institutional holdings of 39.61% provide reasonable float for trading liquidity, though the declining mutual fund participation suggests institutional investors are reducing exposure.

Stock Performance: Severe Underperformance Across Timeframes

Whirlpool of India's stock performance has been dismal across virtually all timeframes, significantly underperforming both the benchmark Sensex and its sector peers. Over the past year, the stock has declined 31.10% whilst the Sensex has gained 5.94%, resulting in a negative alpha of 37.04 percentage points. This underperformance extends across longer timeframes, with the stock posting negative returns of 14.77% over two years and 9.48% over three years, compared to the Sensex's gains of 29.67% and 36.93% respectively.

The stock has also underperformed its sector peers, delivering a one-year return of negative 31.10% compared to the electronics and appliances sector's negative 23.04%, representing an underperformance of 8.06 percentage points. This sector-relative underperformance indicates company-specific issues beyond broader industry challenges.

Recent price action shows some stabilisation, with the stock gaining 16.57% over the past month compared to the Sensex's 2.77% gain, delivering a positive alpha of 13.80 percentage points. However, this recent bounce appears to be a technical rebound from oversold levels rather than a fundamental improvement, as it coincides with the weak Q2 FY26 results.

The stock's high beta of 1.35 indicates significantly higher volatility than the broader market, with an annual volatility of 43.14% compared to the Sensex's 12.45%. This high volatility, combined with negative returns, places the stock in the "High Risk Low Return" category, making it unattractive from a risk-adjusted return perspective. The negative Sharpe ratio confirms that the stock has failed to compensate investors adequately for the elevated risk.

Investment Thesis: Mixed Signals Across Key Parameters

The investment thesis for Whirlpool of India presents a complex picture with mixed signals across the four key parameters of valuation, quality, financial trends, and technical indicators. The company's proprietary Mojo score of 47 out of 100 places it firmly in the "SELL" category, reflecting significant concerns about near-term prospects despite some redeeming qualities.

From a valuation perspective, the stock has become more attractive following the sharp price correction from its 52-week high. The valuation grade was recently upgraded to "Attractive" from "Fair" on November 03, 2025, reflecting the improved risk-reward ratio at current levels. However, this attractive valuation must be weighed against deteriorating fundamentals and negative earnings momentum.

The quality assessment has been downgraded from "Good" to "Average" as of August 2025, reflecting concerns about the company's long-term financial performance. Whilst the company maintains strengths such as zero debt, reasonable ROCE of 21.25%, and market leadership position, these are offset by weak ROE of 8.31%, modest long-term growth (sales CAGR of 9.26%, EBIT CAGR of just 3.38%), and consistent underperformance against benchmarks.

The financial trend is classified as "Negative" for Q2 FY26, with multiple red flags including lowest quarterly net sales, lowest operating profit, lowest operating margin, and excessive reliance on non-operating income. The negative financial trend represents the most significant concern for near-term performance and suggests that operational challenges may persist in coming quarters.

Technical indicators present a mixed picture, with the overall trend classified as "Mildly Bullish" since October 17, 2025. Weekly MACD shows bullish signals, and moving averages are turning positive, suggesting some technical support. However, the stock trades below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating that the bullish trend is nascent and vulnerable to reversal if fundamentals fail to improve.

Key Strengths & Risk Factors

Outlook: What to Monitor in Coming Quarters

The outlook for Whirlpool of India hinges critically on its ability to demonstrate operational improvement in the coming quarters. The company faces a crucial test in Q3 FY26, which typically represents a seasonally strong period due to festive season demand. Failure to show meaningful recovery in sales volumes and operating margins during this favourable period would raise serious questions about the company's competitive positioning and operational capabilities.

Management's ability to address the severe margin compression will be the key determinant of investment outcomes. The company needs to demonstrate that the Q2 FY26 margin collapse was primarily due to seasonal factors and adverse operating leverage, rather than structural issues such as pricing power erosion, market share loss, or uncontrollable cost inflation. Concrete evidence of margin recovery initiatives, cost optimisation programmes, and product mix improvement will be essential to restore investor confidence.

The broader competitive landscape in the consumer durables sector remains challenging, with both organised and unorganised players competing aggressively for market share. Whirlpool India's ability to leverage its brand strength, distribution network, and parent company's global expertise will be crucial in navigating this competitive environment whilst maintaining profitability.