Motilal Oswal - Blue Star Ltd. (BLUESTARCO) MOSL: BLUE STAR (Neutral)-Results ahead of expectation, UCP segment disappoints

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Motilal Oswal

MOSL: BLUE STAR (Neutral)-Results ahead of expectation, UCP segment disappoints

BLUE STAR: Results ahead of expectation, UCP segment disappoints

(BLSTR IN, Mkt Cap USD0.7b, CMP INR565, TP INR550, 3% Downside, Neutral)

Results ahead of expectation: Sales at INR10.3b grew 21.5% on YoY basis, ahead of our estimate of INR9.1b. Sales growth was supported by strong execution in the EMP segment (+27% YoY). EBITDA of INR581m (+18.7% YoY) was driven by better margin performance in the professional electronics segment (21.6% v/s 7.4% in 2QFY18), which offset the 270bp YoY decline in the unitary cooling product (UCP) segment. Adj. net profit declined 2% YoY to INR223m impacted by higher finance charges (INR117m v/s INR59m in 2QFY18) and loss in the Oman JV (INR43m loss in Q219 as compared to INR4m profit in Q218).
Commercial Refrigeration segment drives UCP growth: The UCP segment reported a sales growth of 9% YoY to INR3.4b supported by better performance in the commercial refrigeration segment (+22% YoY) on strong demand arising from food retailing and quick service restaurants. Room AC sales registered 14% YoY growth as against industry growth of 8%. EBIT margin declined 270bp YoY to 2.4%, impacted by higher warehousing cost and trade discounts offered by Blue Star to liquidate inventory in the system. 43% of the Room AC sales came in from inverter AC, which has better realizations. Management guided for 9.5-10.0% margin in FY19, excluding 100-150bp impact from water purifiers where it expects to book INR0.8-1b of sales in FY19.

01/11/2018 10 EN

Underlying

Blue Star Ltd.

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.

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INE472A01039 National Stock Exchange of India India

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Motilal Oswal

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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MOSL: BLUE STAR (Neutral)-Results ahead of expectation, UCP segment disappoints

BLUE STAR is slightly downgraded to Slightly Positive due to an increasingly adverse environment

MOSL: BLUE STAR (Sell)-Weak operating performance; UCP disappoints

Blue Star's Q3FY20 results (Neutral) - Weak quarter

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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