Sharekhan's research report on Blue Star
Blue Star reported an impressive performance with strong revenue growth across business verticals, OPM was also ahead of expectations despite gross margin pressures. Net profit grew 5x y-o-y owing to strong operational performance, higher other income and lower tax. Demand for Room air conditioners (RACs) peaked in March/April and started slowing down from May onwards. Blue Star’s RAC volumes grew by 39% during January– June 2022 as compared to January – June 2019 (comparable pre-covid quarter), while the market grew by 30% during the same period. The management expects the margin to improve from H2FY23 given declining commodity prices. On a sustainable basis, the company expects RAC operating margin at ~9%.
We maintain a Buy rating on Blue Star Limited (Blue Star) with an unchanged PT of Rs. 1,250, given robust Q1 and multiple growth levers in UCP as well as EMPS segments.
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