MOSL: BLUE STAR (Neutral)- Operating performance below estimates
​Blue Star:Operating performance below estimates
(BLSTR IN, Mkt Cap USD0.9b, CMP INR763, TP INR685, 10% Downside, Neutral)
- Revenue declined 6% YoY to INR8.3b (est. of INR9.6b) in 2QFY18. EBIDTA improved 17% YoY to INR0.5b (est. of INR0.6b), while adj. net profit increased 5% YoY to INR208m (est. of INR307m).
- UCP revenue rose 1% YoY (+12% adj. for excise duty impact) to INR2.9b, below our estimate of INR3.2b. Revenue in this segment was adversely impacted by lower restocking by dealers and muted demand during the festive season. Room AC segment grew 5% YoY (in line with market growth), while VRF segment increased 10% YoY. EBIT margin shrunk to 5.4% from 6.8% 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 remained stable at 11% in 2QFY18; it expects to take this share to 12% once the market stabilizes.
- EMP segment’s revenue declined 10% YoY to INR5.0b, impacted by delayed execution on account of slow traction of renegotiation, and revision across several contracts post GST implementation. EBIT margin expanded to 7.6% from 5.1% in 2QFY17, largely due to accelerated execution of order book in select sub-segments.
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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