Blue Star Q1 Results Review - Satisfactory, Growth Plans In Place: Dolat Capital

Dolat Capital Report

Blue Star Ltd.’s Q1 FY24 revenue was ahead, profitability was in line with estimates. Unitary Products segment grew 6% driven by strong traction in commercial refrigeration business.

Electro-mechanical projects and corporate and commercial segment saw healthy 19% growth.

While room AC industry de-grew 10% in Q1 due to unseasonal rain, decline in room AC sales for Blue Star was much lesser. MS in room AC was maintained at 13.5%.

Unitary products declined 60 basis points to 7.5% in Q1. However, management maintained margin guidance of 8-8.5% in the segment for FY24E.

Focus on value engineered products, cost control measures and scale improvement will drive profitability going ahead.

With healthy order inflow and execution pace in EMP segment, expected demand revival in room AC during festive season, and strong backward integration plans, growth prospects for Blue Star remain promising.

We have revised our FY24/25E earnings per share estimates to Rs 19/25 respectively.

Maintain 'Buy' with a revised target price of Rs 888 (35 times FY25E EPS).

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