Why Whirlpool Shares Are Nosediving Today

Shares of Whirlpool of India were sliding on Friday on reports that the household appliances firm’s parent company was looking to divest its stake in the Indian unit.

What Happened: US-based Whirlpool Corporation, is poised to divest a 24% stake in its Indian subsidiary to pare down debt.

Presently, Whirlpool Corporation maintains a 75% ownership in Whirlpool India and aims to retain a significant interest in the company post-transaction. The proceeds from the stake sale will be allocated towards debt reduction, bolstering the company’s balance sheet flexibility, as stated in regulatory filings.

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Why It Matters: Whirlpool specified in a regulatory filing, “Proceeds expected to be used for debt repayment are incremental to the $500 million term loan repayment that [Whirlpool] previously disclosed it expects to pay in the fourth quarter of 2023.”

Despite the divestment, India continues to be a vital market for substantial growth, aligning with Whirlpool’s overall growth strategy, according to the firm. Consequently, it said the announcement is not anticipated to impact the previously provided full-year guidance.

In the last six months, Whirlpool of India’s stock has witnessed a growth of 10.15%. In comparison, the benchmark Nifty 50 has seen a rise of 8.9% during the same period.

Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) hold 3.5% and 13% of the company, respectively, while the public owns an 8.6% stake.

Price Action: Whirlpool India shares were down 3.09% at ₹1,522.37 near the start of trade on Friday.

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