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Dolat Capital Report
Blue Star Ltd.'s revenue grew 27%, ahead of our estimates led by healthy demand across categories despite a seasonally lean quarter. Carried forward order book in September 2022 remained healthy at Rs 42 billion, up 31% YoY.
Room air conditioner business grew 17% YoY in Q2 and maintained market share of 13.25%. Company expects it to further improve 50 bps by FY23E end and to 15% by FY24E.
We are enthused by the Ebit margin expansion in unitary cooling product segment (up 110 bps), compared to Voltas (down 280 bps) and operating loss in Lloyd. Management maintains guidance of 8-8.5% margins in UCP in FY23E (6% in FY22).
With disciplined pricing approach, Blue Star managed to restrict Ebitda margin decline to 30 bps. Falling commodity prices, calibrated price increases and indigenisation efforts are likely to support margins going ahead.
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