Angel Broking neutral on Blue Star

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Angel Broking neutral on Blue Star

Angel Broking has maintained neutral rating on Blue Star, in its January 31, 2011 research report.

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Angel Broking has maintained neutral rating on Blue Star , in its January 31, 2011 research report.

"For 3QFY2012, Blue Star reported a 3.9% yoy decline in its revenue to Rs590cr. OPM for the quarter fell by 824bp yoy and 278bp qoq to negative 0.5% due to higher raw-material cost and other expenditure. PAT declined by 247% yoy to negative Rs33cr. According to management, the current scenario is going to continue for the next two to three quarters owing to cost overruns. Thus, we continue to maintain our Neutral recommendation on the stock."

"Blue Star reported a 3.9% yoy decline in its top line to Rs590cr in 3QFY2012. The decline in the company's revenue was on account of a 15.3% yoy decline in the electromechanical projects and packaged air conditioning systems (EMPPACS) segment to Rs368cr, which accounted for nearly 63% of the total revenue. The segment also reported an EBIT loss of Rs15cr in 3QFY2012 vs. profit of Rs29cr in 3QFY2011, negatively affecting margins. Owing to the losses in this segment, overall OPM declined by 824bp yoy to negative 0.5%. The company also reported forex loss of Rs14cr during the quarter. PAT came in at negative Rs33cr during the quarter."

"Demand from the key market segments has still not picked up. However, growth in the cooling products segment remains strong. Overall, management is not very optimistic and expects the current scenario to continue over the next two to three quarters. Management also expects a 5-6% yoy contraction in margin until 1QFY2013. We have revised our estimates downwards and continue to maintain our Neutral stance on the stock," says Angel Broking research report.   

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To read the full report click on the attachment