MOSL: BLUE STAR (Neutral)-Miss led by lower-than-estimated UCP margins
​Blue Star: Miss led by lower-than-estimated UCP margins
(BLSTR IN, Mkt Cap USD0.9b, CMP INR698, TP INR650, 7% Downside, Neutral)
- Revenue grew by 21% YoY to INR14.6b (est. of INR13.2b) and EBIDTA by 14% YoY to INR0.9b (est. of INR1.0b). Adj. net profit rose 13.8% YoY to INR585m (est. of INR590m).
- UCP revenue rose 13% YoY to INR8.4b, in line with our estimate of INR8.6b. Revenue in this segment was adversely impacted by dealer destocking in the run-up to GST rollout. Room AC segment grew by 7% YoY (v/s flattish market growth) and VRF segment by a strong 24% YoY. EBIT margin shrunk to 9.7% from 11.0% in the year-ago period on account of marketing investment made by the company in the water purifier segment and higher raw material cost. BLSTR’s market share in room ACs expanded 50bp to 11% in 1QFY18; it expects to achieve market share of 12-12.5% by end-FY18 v/s 11.5% in FY17.
- EMP segment’s revenue grew 31% YoY to INR5.7b, led by improved pace of execution of projects in hand. Traction was witnessed on account of higher demand for supplies and services by customers prior to GST implementation Traction was witnessed in the IT, ITES, hotels and hospitality segments. EBIT margin expanded to 3.9% from 0.7% in 1QFY17, largely due to accelerated execution of order book in select sub-segments and an increase in billing from new projects booked over the last one year.
Blue Star is an air-conditioning and commercial refrigeration company. Co. is engaged in the provision of cooling solutions as well as import distribution and maintenance of professional electronic and industrial equipment and systems, including turnkey engineered solutions in the areas of banking, telecom, healthcare, defense, pharmaceuticals, manufacturing and research and development. Co.'s business segments are Central Air-conditioning Systems, Cooling Products and Professional Electronics and Industrial Equipment.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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