YES Securities' research report on Blue star
BLSTR now has made a habit of beating consensus, Q3 is the 5th quarter in row where they have delivered positive surprise. All segments have contributed to its growth with all its verticals registering strong double‐digit growth. Order‐inflow continues to be robust with order‐book swelling to Rs48bn which has been highest ever. Execution is expected to keep pace with inflows and backlog as there is pressure on execution from its customers. Company expects strong traction to continue in project business as there is strong demand from infrastructure and capex related activity with office space witnessing increased traction. On UCP front both RAC and commercial refrigeration has seen continued growth even in the lean season. BLSTR has been able to outperform its peers in terms of revenue as well as margins in challenging environment. The work done in expanding distribution and extending product portfolio into affordable segment is now bearing fruits resulting in traction in North which has been the weak area for the company. Given the improved pace of execution in project business and market share gains in RAC, we remain positive on the stock. We upgrade the stock to BUY as we foresee growth momentum and outperformance to continue without compromising on the profitability. BLSTR is estimated to deliver strong double‐digit CAGR revenue growth on back of improved execution of projects, market share gains in RAC and continued growth momentum in Commercial refrigeration. We now pencil in revenue/EBITDA/PAT CAGR of 21%/29%/42% over FY22‐25E.
We have increased our SoTP‐based PT to Rs1,521 vs earlier Rs1,370 valuing Unitary products business at 45x rolling forward our valuation multiple.
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