MNC Stock To Buy That Is Debt Free And Close To 52-Week Lows

The Sensex is now inching back to record highs and is very close to the same. At the same time it is hard for shareholders to see their stocks languishing or moving the other way. Here is one MNC stock that we believe could rally from here.

Whirlpool of India: Stock near 52-week low

52-week low	52-week high	Current market price
Rs 1712	Rs 2787	Rs 1876

Whirlpool of India is a subsidiary of Whirlpool Corporation, the world's leading major appliance manufacturer. The company owns three manufacturing facilities at Faridabad, Pondicherry and Pune.

The stock has been languishing for sometime now and is currently close to its 52-week lows. The company has a solid presence in a range of products including refrigerators, washing machines, air conditioners etc.

Financial performance of the company

For the quarter ending Sept 30, 2021, the company reported a standalone net profit of Rs 107 crores, as against Rs 179 crores in the corresponding period of the previous year. The company has been facing cost pressures like most other companies. Apart from this sporadic curfews and lockdown also tends to impact the financial performance of the company. However, most companies have not been able to pass on the sharp increase in the price of raw materials to consumers.

Going ahead this year too maybe a difficult year, but, 2022-23 could be a much better year, which should see covid behind and companies reporting full-fledged growth.

Stock performance and evaluation

A leading brokerage house pegged the EPS for the company at Rs 45 in Fy 2022-23. We think that might be a little optimistic. Even if the company does an EPS of Rs 40 and we discount the same 50 times, the stock should trade at around Rs 2000 levels. We still believe that one can buy the stock a little lower around the Rs 1500 mark. The nature of the business is fiercely competitive and costs are increasing. So, buy the stock only on declines.

A word of caution on the markets

Markets have recovered from its low and it is sustaining well above 18k mark over last couple of days. Q3 result season has started on a good note with several heavy weights reporting in-line to better-than-expected numbers. Nifty is trending upwards while Bank Nifty is witnessing some consolidation and a pause in its momentum.

"Traders are advised to apply buy on decline strategy and be with stock specific ideas. From a near term perspective, we expect stock specific action in selected auto, tech, chemicals and fertilizer stocks," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

The problem for investors is that valuations for most companies look stretched and investors should be careful before investing. 

Disclaimer

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and is family do not hold shares in the above company.