Synopsis:
Whirlpool of India jumped sharply after it inked a long-term licensing agreement with its parent company, which will provide exclusive brand rights for 30 years, technology access, and a consistent revenue stream from service agreements, thereby enhancing investor sentiment
The shares of this leading home appliances manufacturer of India are in focus after the company secured a long-term licensing deal from its parent. In this article, we will dive more into the details.
With a market capitalization of Rs 17,144 crore, the shares of Whirlpool of India Ltd made a day high of Rs 1,363 per share, up by 9 percent from its previous day closing price of Rs 1,237.50 per share. Over the past five years, the stock has corrected by over 34 percent, as compared to the NIFTY 50’s positive return of 119 percent.
About the Announcement
Whirlpool of India Limited has signed several agreements with its parent and group companies aimed at supporting business growth, gaining access to new technology, and ensuring a trouble-free transition of services.
These agreements focus on the strengthening of the company’s internal operations while at the same time maintaining the strategic alignment over the long term with the global group.
Whirlpool India has, under the Brand License Agreement (BLA), been granted exclusive rights to use the “Whirlpool” brand in India and neighboring countries for a period of 30 years. The agreement outlines the royalties that vary between 1 and 3 percent of sales, depending on whether the product is of one type or another.
The Technology License Agreement (TLA) provides Whirlpool India with access to the technical know-how of major domestic appliances, as provided by the company, Whirlpool. Royalties mentioned in the contract are 0.6-0.65 percent of sales up to March 31, 2029, which is a way to ensure that there is continuous innovation and product development.
Through the Services Agreement, Whirlpool India is committed to providing technical and engineering services to Whirlpool Asia LLP. The firm will be paid on a cost-plus-18 percent basis, and there is also a guarantee of a minimum service fee through FY29, thus providing a steady revenue stream from such support services.
The TSA (Transitional Services Agreement) is aimed at providing the necessary services to ensure a smooth business transition as Whirlpool Corporation reduces its stake in India. The agreement identifies the services to be provided in detail and jointly sets a limit for the liabilities of both parties, thereby giving security to the operations during the change in ownership.
Lastly, the IP Assignment Deed is a legal document that gives the ownership of certain patents and designs from the corporation, Whirlpool, to the Indian subsidiary, Whirlpool India, in return for a very small amount, thereby bringing about the consolidation of the key IP locally.
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Financial Highlights
The company reported a revenue of Rs 2,432 crore in Q1 FY26, down by 3 percent from its Q1 FY25 revenue of Rs 2,497 crore. However, revenue surged by 21 percent from Rs 2,005 crore in its previous quarter.
Regarding its profitability, the company reported a net profit of Rs 146 crore in Q1 FY26, up by 1 percent from its Q1 FY25 net profit of Rs 145 crore. Additionally, it grew by 23 percent from Rs 119 crore in its previous quarter.
The stock delivered a poor ROE and ROCE of 9.26 percent and 12.63 percent respectively, and is currently trading at a P/E of 48x as compared to its industry average of 56x.
Whirlpool of India Limited, which was incorporated in 1960 and has its head office in Gurugram, India, produces and sells home appliances like refrigerators, washing machines, air conditioners, microwaves, dishwashers, and small kitchen appliances. It is a subsidiary of Whirlpool Corporation and operates in Indian and international markets.
Inshorts
Whirlpool of India jumped 10% today after it inked a long-term licensing agreement with its parent company, which will provide exclusive brand rights for 30 years, technology access, and a consistent revenue stream from service agreements, thereby enhancing investor sentiment
Written by Satyajeet Mukherjee
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