Buy Blue Star; target of Rs 1655: Sharekhan

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Sharekhan's research report on Blue Star

Further, increase in off-take from channel partners for the summer and improving demand for energy efficient models with smart features are encouraging signs. Performance will be aided by commencement of new AC manufacturing facility. Blue Star’s long-term growth would be driven by favourable demand, market share gains, backward integration and deepening of penetration (launch of affordable mass premium products) and expansion of distribution network through conventional and e-commerce channels. It will be further aided by healthy execution in the project business. The company has low debt, low working capital cycle and healthy operating cash flows. We expect Revenue/PAT CAGR of 19%/34% over FY23-25E. At CMP, the stock trades at ~29xFY25E EPS.

Outlook

We maintain a Buy on Blue Star Limited (Blue Star) with a revised PT of Rs. 1,655, as we envisage boost in sales for RACs and refrigeration products based on prediction of a harsh and elongated summer.

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Blue Star - 03 -03 - 2023 - khan