Blue Star Ltd. share price target

Management expects AC market to clock 20% CAGR over five years (vs. 7-10% historically) buoyed by increased affordability and reach

Good quarter with strong room AC sales due to harsh summer and pent-up demand in target markets, aided by its broad product portfolio

In BLSTR analyst meet, management highlighted its long term strategic vision which shall help funnel next leg of growth which include 1) mass market focus in Room AC (launched 32 SKUs/ 80% of 4Q21 sales) 2) Sri City plant (1.2mn units) to reduce logistic costs and help better serve southern...

As expected, BLSTR posted a weak 4QFY21 revenue, with a flat two-year revenue CAGR. EBITDA came in below our estimate as rising commodity costs, coupled with an increase in competitive intensity, weighed on margin. The commentary on RAC industry trends suggests that events like a lockdown in Apr'21 (and the ongoing extension into May'21), rising commodity costs, and higher competitive intensity poses a risk to earnings in FY22. We cut our FY22E/FY23E EPS estimate by 17%/6%. At the CMP, the UCP business of BLSTR is trading at 50x FY23E EPS, thus indicating an...

As expected, BLSTR posted a weak 4QFY21 revenue, with a flat two-year revenue CAGR. EBITDA came in below our estimate as rising commodity costs, coupled with an increase in competitive intensity, weighed on margin. The commentary on RAC industry trends suggests that events like a lockdown in Apr'21 (and the ongoing extension into May'21), rising commodity costs, and higher competitive intensity poses a risk to earnings in FY22. We cut our FY22E/FY23E EPS estimate by 17%/6%. At the CMP, the UCP business of BLSTR is trading at 50x FY23E EPS, thus indicating an...

As expected, BLSTR posted a weak 4QFY21 revenue, with a flat two-year revenue CAGR. EBITDA came in below our estimate as rising commodity costs, coupled with an increase in competitive intensity, weighed on margin. The commentary on RAC industry trends suggests that events like a lockdown in Apr'21 (and the ongoing extension into May'21), rising commodity costs, and higher competitive intensity poses a risk to earnings in FY22. We cut our FY22E/FY23E EPS estimate by 17%/6%. At the CMP, the UCP business of BLSTR is trading at 50x FY23E EPS, thus indicating an...

BLSTR's Unitary products grew by 17% YoY led by healthy growth in AC and Commercial Refrigeration business. The AC business grew 32% YoY surpassing industry growth of 25% YoY with market share of 13%. Looking to ramp up exports as it intends to participate in the impending PLI scheme. In the EMPS business, cautious execution of the projects based on customer's credit profile and operating cash flow visibility with growth opportunities from metro railways, electrical...

BLSTR's 3QFY21 revenue was 7% below our estimate, with the miss attributable to Electro Mechanical Projects and Services (EMPS) segment. Operating profit stood higher than our estimate on better sales mix and continuation of cost rationalization measures. Net borrowing reduced by INR2.1b to INR1.3b (v/s INR3.4b in 1HFY21 and INR1.3b in 9MFY20). The company continues to maintain higher liquidity in uncertain times as gross debt stood at INR5.9b. The commentary on RAC industry trends suggest improving prospects. We...

Q2 was a gradual improvement over Q1 with revenues down 28% YoY, driven by a dip of 16% in the unitary cooling business at Rs3bn. The project business was down 31%, impacted due to sites with sites operating at 65-70% levels in Q2 as they open up. While revenues came in line, EBIDTA and PAT were better than estimates (Exhibit 1) Both the businesses are expected to show improvement as the economy opens up, with company expecting better H2 margins. The AC business is expected to normalize by Q4FY21, which is the next big...

5 August 2020 successful in reducing its working capital (WC) cycle in FY20. As % of sales, WC stood at 6.2% in F20 (v/s 10.6% in FY19) due to debtor days declining to 57 days in FY20 (v/s 78 days in FY19). Free cash flow (FCF) generated stood at INR3.7b in FY20, implying FCF/EBITDA of 131% and FCF/Adj. PAT of 252%. Over FY14-20, FCF generation stood strong at INR8.9b, implying 100% FCF/Adj. PAT. BLSTRs products are exported to 18 countries across the Middle East, Africa, SAARC and ASEAN regions. Revenues from abroad doubled to INR5.2b in FY20 (v/s INR2.6b in FY15). Also, share of revenue from abroad now constitutes ~10% of the companys total revenue (v/s 8.