13 May 2020 Blue Star (BLSTR) barely managed to report profit in 4QFY20 as shutdown toward end-Mar20 impacted the UCP/EMP segments. Also, BLSTR is looking at debt financing to maintain liquidity in the current challenging times. We have cut our FY21E/F22E earnings by 57%/29% as we factor in likely weak primary sales in the UCP segment in FY21 until inventory weak order inflow and execution in the EMP segment as the company focuses on cash conservation. Our SOTP-based TP stands at We continue to prefer Voltas over BLSTR to play the underpenetrated AC market in India. 4QFY20 revenue declined 18.6% YoY to INR13b and was 16% below expectation. Owing to lack of operating leverage and ECL related provisions in the project business, EBITDA declined 66% YoY to INR373m (63% below est.) EBITDA margin was down 400bp YoY to 2.9% (v/s est. Adj. PAT came in at INR96m, down 88% YoY.