Accumulate Blue Star; target of Rs 381: Emkay

Emkay's research report on Blue StarBlue Star (BLSR) reported 15% YoY growth in revenues led by: i) 22% YoY growth in Electro mechanical projects & packaged air-conditioning systems (EMP & PAC) and ii) 21% YoY growth in cooling products (CP). EBITDAM improved by 260bps owing to i) Increase in revenue bookings in EMP segment and ii) higher sales in CP segment. Order backlog increase by 14%YoY to Rs16bn. Continuing focus on cash flow generation and operating metrics; Recommend Accumulate BLSR's strategy to (a) selectively bid for large ticket size orders and (b) pursuing profitability over growth has and will keep in good stead. Increase in the market shares in RAC and PAC in a competitive environment is quite commendable. We retain positive bias on Blue Star. We recommend accumulate with a target price of Rs381/Share (@20X FY17E earnings).

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