Blue Star Slumped Over 20% In Last 3 Months — What's Behind The Decline?

Blue Star shares have slumped over 20% in the last three months and a similar decline is also witnessed in the larger time frame of the last six months.

The company reported a cut in production by 20% in May and over 25% in June. This came after the weaker-than-expected summer season dampened air-conditioner demand, Managing Director B Thiagarajan told NDTV Profit in an earlier interview.

The company had entered the season expecting over 25% growth, building on last year’s record performance. But unseasonal rainfall in early April and the early onset of the monsoon disrupted sales. “Right from April first week, it was bad news,” Thiagarajan said. He estimated that the market may have shrunk by nearly 25% so far.

Coming to the analysts' take on the counter, there is a mix of ratings. Eleven out of the 23 analysts tracking the company have a 'buy' call on the counter while ten have a 'sell' rating. Two analysts gave the stock a 'hold' rating, according to Bloomberg data. The target price set is Rs 1,737 which implies a 6.2% upside on the counter.

In the last three months, the scrip has slumped 23.6%. The share hit its three-month low in May when it touched Rs 1,532.

Zooming out to a larger time frame too shows a declining trend. Taking the last six months, the share price was higher in December, reaching Rs 2,337.5. Then the counter saw a steady slip in price till it reached a low of Rs 1,532.3. In the last six months, the counter has declined 23.40%.

Blue Star is an Indian air conditioning, commercial refrigeration and mechanical, electrical, plumbing and fire-fighting contracting company with over 80 years of experience.

The company offers a range of cooling solutions including chillers, ducted systems, VRFs, room ACs, deep freezers, water coolers, and cold rooms, among others. It has also made its entry into air purification, engineering facilities management, commercial kitchen and medical refrigeration.

Blue Star's integrated business model is a manufacturer, EPC services provider and an after-sales service provider. This enables the company to provide comprehensive solutions for the residential, commercial and infrastructure segments.