Blue Star Ltd. share price target

Market share gain in RAC; good traction in EMP

Blue Star delivered strong revenue growth of 87.3% YoY in Q1FY23 (3-year CAGR 7.7%). Pent-up demand and revival across segments have driven strong revenue growth.

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...