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Nirmal Bang Report
Blue Star Ltd.'s topline was slightly above our estimate (plus 3.9% YoY) due to higher-than anticipated growth in room AC. Ebitda margin was also slightly above our estimate (up 40 basis points YoY) due to operating leverage benefits.
Despite a non-seasonal quarter for room AC, Blue Star maintained its market share at 13.5%. While room AC industry grew by 30% YoY, its room AC business grew by ~39% YoY.
We upgrade to 'Buy' with a revised SOTP-based target price of Rs 1,015 (36 times blended price-to-earning on September 2025E earning per share).
We draw comfort in the business model basis the strategy of chasing profitability and free cash flow (not market share), presence in high growth commercial refrigeration and quality order booking from electro-mechanical projects and packaged AC Systems.
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