Buy Blue Star: target of Rs 1200: Sharekhan

Sharekhan's research report on Blue Star

Expectation of strong summers, focus on technology, in-house manufacturing, introduction of new products and a recovery in project segment will be near-term growth drivers. Company would focus on growing higher than industry growth rates, improving profitability through scale and backward integration, deepening distribution reach and pursuing profitable adjancies. Revenue and earnings to clock a 27% and 71% CAGR, respectively for FY2021-2023E driven by core UCP segment along with improvement in OPM while return ratios are expected to improve.

Outlook

We initiate coverage on Blue Star (Blue Star) with a PT of Rs. 1,200, given its high net earnings growth trajectory for FY2021E-FY2023E and favourable relative valuation.

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