Motilal Oswal - Blue Star Ltd. (BLUESTARCO) MOSL: BLUE STAR (Neutral)-Results below expectation-Margins disappoint

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Motilal Oswal

EUR 120.00 For Business Accounts Only

MOSL: BLUE STAR (Neutral)-Results below expectation-Margins disappoint

Blue Star: Results below expectation; Margins disappoint

(BLSTR IN, Mkt Cap USD0.8b, CMP INR587, TP INR620, 6% Upside, Neutral)

Results below expectation: 3QFY19 sales at INR11b grew 18% on YoY basis, ahead of our estimate of INR10.5b. It was supported by strong pick-up in UCP segment sales (+22% YoY), and timely execution of projects in the EMP segment (+16% YoY). EBITDA of INR423m (-0.2% YoY) was below our estimate of INR585m, impacted by weaker-than-estimated margins in UCP segment (-250bp YoY; 2.4%) and EMP segment (-80bp YoY; 4.6%). Adj. net profit declined 53% YoY to INR62m, impacted by one-time expense of INR72m for the company's Platinum Jubilee Celebration and loss in its Oman JV (INR141m loss in 3Q19), which Blue Star has exited with the entire exposure being provided for during the quarter.
Commercial Refrigeration segment drives UCP growth: The UCP segment reported sales growth of 22% YoY to INR3.9b, supported by better performance in the commercial refrigeration segment (+35% YoY) and growth in the air cooler and water purifier business. Room AC sales grew 8% YoY, ramping up its market share by 50bp to 12.5%. EBIT margin declined 250bp YoY to 2.4%, impacted by inventory liquidation in the Room Ac segment. 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.

07/02/2019 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 below expectation-Margins disappoint

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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