Blue Star trades flat on BSCL equity share acquisition

BSCL, incorporated in 2021 as a wholly-owned subsidiary of Blue Star Limited, manufactures refrigeration equipment, cooling appliances, and other related products.

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Shares of Blue Star were trading at Rs 898.40, 0.20 percent higher on open on September 27, after the company, as a part of the objects of its QIP issue, acquired 4.9 crore equity shares of its subsidiary, according to an exchange filing.

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The filing stated Blue Star has acquired 4.9 crore equity shares of Rs.10 each at par, aggregating to Rs 49 crore by way of subscribing to the rights issue of Blue Star Climatech Limited (BSCL), which is its wholly owned subsidiary. This investment will help BSCL "inter alia in repayment / pre-payment, of certain outstanding borrowings and financing the cost towards its expansion plans".

BSCL, incorporated in 2021 as a wholly-owned subsidiary of Blue Star Limited, manufactures refrigeration equipment, cooling
appliances, and other related products.

For the quarter ending June 2023, Blue Star reported a 12.98-percent year-on-year increase in net sales to Rs 2,226.00 crore and a 12.26-percent increase in net profit to Rs. 83.35 crore for the same period. Earnings before interest, taxes, depreciation and amortisation for the same period were also up 15.38% to Rs 154.40 crore from Rs. 133.82 crore in June 2022.

Also read: Blue Star targets to achieve market share of 15% by FY25 in room air conditioners segment

According to analysts at Emkay, which has a Hold call on Blue Star, strong backward integration and scale are likely to drive the UP segment’s margins to 8-8.5% in the medium term. Additionally, the management’s strong focus on building its own manufacturing facilities, according to the report, is backed by an approved fundraise of up to Rs 1,000 crore to support its capex plans, working capital as well as reduced leverage.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.