Ideas for Profit | Blue Star Q2: Electro-mechanical projects hurt performance; unitary products salvage show
January 03, 2020 / 07:59 PM IST
PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook
Blue Star (mcap: Rs 7,657 crore) reported a decent performance in the September quarter. Though its three segments delivered robust revenue growth, disappointing margins in electro-mechanical projects dragged the company’s overall profitability.
Emphasis on cash flow-steady electro-mechanical projects and measures to boost unitary product sales (for e.g. air conditioners) will be critical to the company’s success. From current levels, the stock’s scope for a re-rating appears minimal.
Q2 FY20 review
- Revenue from electro-mechanical projects grew predominantly due to demand for packaged...