Buy Blue star Ltd For Target Rs.1,593 - Anand Rathi Share and Stock Brokers
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Firing on all cylinders; maintaining a Buy
Supported by all its business verticals, Blue Star’s Q3 FY23 revenue grew 19% y/y. Rising mercury levels and the strong project order book would be growth drivers. The Sri City plant commissioning could help meet volumes required for air-conditioners. Its upgraded Wada plant, dedicated to commercial coolers, would further aid volume growth. The company should be able to fire on all cylinders as demand prospects are bright.
Strong revenue growth supported by all business verticals. Q3 revenue rose 19% y/y as project revenue rose 21% y/y, UCP revenue was y/y 15% and professional electronics revenue grew 29% y/y. The EBITDA margin was 20bps lower y/y despite a 90bp gross-margin expansion, since staff costs and other expenses rose respectively 15% and 40% y/y. Because of the change in method of depreciation from WDV to SLM, depreciation was 31% lower y/y. Net income rose 23% y/y as the tax rate was lower, at 27% (33% a year ago). 9M FY23 revenue shot up 40% y/y. The EBITDA margin expanded 50bps despite the gross margin being 60bps lower and other expenses being 49% higher y/y and staff costs were 16% higher y/y. Supported by the lower tax rate, net income increased 91% y/y
Aims at 15% market share in room ACs by FY25. The company plans to expand its range of room air-conditioners in Feb’23. Its market share at endQ3 FY23 was 13.25%
Outlook, Valuation. Key growth drivers leading to strong FY23-25 growth are (a) the good reassuring project order book, (b) the Sri City plant commissioning, which can support volumes required for coming seasons and (c) upgraded Wada plant, which manufactures commercial air-coolers. At the CMP, the stock trades at 34x/27x FY24e/FY25e EPS of Rs39/Rs50. We retain a Buy rating with a TP of Rs1,593 (32x FY25e EPS of Rs49.8), earlier Rs1,517
To Read Complete Report & Disclaimer Click Here
Please refer disclaimer at https://www.rathi.com/LeadGenerate/Static/disclaimer.aspx
SEBI Registration No.: INZ000170832
Above views are of the author and not of the website kindly read disclaimer
