Buy Blue Star; target Rs 180: Firstcall Research

Firstcall Research report on Blue Star

"Blue Star achieved a turnover of Rs. 8582.40 million for the 4th quarter of the current year 2012-13 as against Rs. 8136.00 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 406.80 millions and a net profit of Rs. 185.50 million against Rs. (453.70) million reported respectively in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 2.06 for the 4th quarter as against an EPS of Rs. (5.04) in the corresponding quarter of the previous year." "Outlook and Conclusion: At the current market price of Rs.160.75, the stock P/E ratio is at 10.89 x FY14E and 7.00 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.14.76 and Rs.22.98 respectively. Net Sales of the company are expected to grow at a CAGR of 4% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 0.62 x for FY14E and 0.59 x for FY15E. Price to Book Value of the stock is expected to be at 2.76 x and 2.66 x respectively for FY14E and FY15E." "The Company's effort to drive margins through price increases, value engineering, prudent working capital management and cost control coupled with a focus on improving the quality of new orders and Launches Wide Range Of Stylish Room Air- conditioners With Emphasis On Energy Efficiency, helped it return to profitability during the year. Apart from being energy efficient the Company also plans to promote its inverter line-up of residential split air conditioners for the benefit of energy conscious customers. The range of window air conditioners has also been enhanced with addition of models specifically for the north India market. The Company intends to further enhance these efforts in order to sustain this performance over the current year as well. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. While the external market environment continues to be challenging, businesses such packaged air-conditioning, room air conditioners, refrigeration products and after-sales service have a positive outlook. So, we recommend ‘BUY’ in this particular scrip with a target price of Rs 180 for Medium to Long term investment," says Firstcall Research report. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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