MOSL: BLUE STAR (Neutral)-Results impacted by implementation of INDAS 115
Blue Star: Results impacted by implementation of INDAS 115
(BLSTR IN, Mkt Cap USD1.0b, CMP INR699, TP INR695, 1% Downside, Neutral)
- INDAS 115 distorts 1QFY19 results: Sales grew 7.3% to INR15.1b on a like-to-like basis. Implementation of INDAS 115 has led to restatement of the 1QFY18 numbers, given retrospective changes in the sales recognition method. Starting 1QFY19, sales as per INDAS 115 are booked on (a) delivery to customer as against dispatch earlier, and (b) multiple expenses (dealer discounts, trade discounts, incentives) are now netted off with sales as against booked as expenses earlier. EBITDA of INR1.4b (+24% YoY) was supported by better margin performance in the EMP segment. Adjusted net profit was flat YoY at INR764m.
- Unitary Cooling Product (UCP) segment reported a sales decline of 4% YoY to INR8.3b, impacted by weak performance in the room AC segment. Room AC sales declined 10% YoY (13% decline for the industry), impacted by unseasonal rains in the southern region. EBIT margin expanded 30bp YoY to 11.4%, supported by better product mix. 45% of the room AC sales came in from inverter ACs, which have better realizations. Management guided for 9.5-10% margin in FY19, including 150bp impact from water purifiers, where it expects to book INR1b of sales in FY19 (2-2.5% market share). Commercial refrigeration registered 8.2% YoY growth, which restricted the decline in UCP segment to 4% YoY.
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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