Block Deal: This FMCG Stock Slumps After 3.2 Crore Shares Worth Rs 4,039 Crore Change Hands

On Tuesday, February 20, a total of 3.2 crore shares of Whirlpool of India, constituting 24.7% equity and valued at Rs 4,039 crore, were exchanged at an average rate of Rs 1,280 per share. This comes in the wake of reports by Reuters on Monday, February 19, suggesting that Whirlpool Corporation, the global giant, was considering a substantial divestment of its Indian subsidiary.

Reuters sources close to the matter revealed that Whirlpool Corporation aimed to sell 24% equity in Whirlpool of India through a block deal, with an estimated total deal size of $450 million. The proposed floor price for this potential transaction is Rs 1,230 per share, signalling a 7.5% discount compared to the current market price (CMP), according to insiders familiar with the situation.

It is worth noting that even with this significant block deal, Whirlpool Corporation will continue to hold a majority stake of 75% in Whirlpool of India, maintaining control over its Indian wholly-owned subsidiary.

This move aligns with last year's reports indicating Whirlpool Corporation's intention to sell its stake in the Indian arm, primarily to raise funds and alleviate its debt burden. The corporation seems to be making calculated decisions to optimize its financial structure and focus on core operations.

Whirlpool of India, the subsidiary in question, reported a commendable 12% growth in consolidated net profit, amounting to Rs 29.93 crore for the third quarter ending December 2023. This robust performance was attributed to volume growth, showcasing the company's resilience and market strength.

Comparatively, during the same period in the previous fiscal year, the company had posted a net profit of Rs 26.71 crore. The positive trend extended to revenue as well, witnessing a substantial 17.9% surge to Rs 1,535.65 crore during the third quarter under review, compared to Rs 1,302.46 crore in the corresponding period of the preceding fiscal.

The shares of Whirlpool of India were seen trading with cuts of more than 2% at Rs 1,302 per share as of 12:20 pm on the National Stock Exchange (NSE). The stock has gained just about 4% in the last one year. The stock has been in the negative for eight out of the last nine trade sessions, indicating a broader bearish sentiment. Over the last six months, Whirlpool of India shares have witnessed a decline of 18.95%.