Blue Star - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Blue Star reported a 3.8% yoy growth in its revenue to Rs.731cr. The OPM for the quarter improved by 67bp yoy and 1,072bp qoq to 4.6% due to lower other expenditure. PAT increased by 110% yoy to Rs.21cr. We continue to maintain our Neutral recommendation on the stock.

Top line improves marginally, but margins turn positive: Blue Star reported a 3.8% yoy growth in its top line to Rs.731cr in 1QFY2013 on a standalone basis. The mediocre performance in the company's revenue was on account of a 7.1% yoy growth in the electromechanical projects and packaged air conditioning systems (EMPPACS) segment to Rs.367cr, which accounted for nearly 50% of the company's total revenue while the cooling products segment posted a revenue growth of only 1.7% yoy to Rs.334cr and accounted for 46% of the total revenue. The professional electronics and industrial systems (PEIS) segment reported a 7.8% yoy decline in revenue to Rs.31cr. The EBIT margin in the main segment (EMPPACS) improved by 596bp to 3.4%, consequently improving margins for the company as a whole on a y-o-y basis.

Outlook and valuation: Demand from market segments has still not picked up. Overall, the management is not very optimistic and expects the current scenario to continue over the next two to three quarters. The management also indicated that margins may erode by 50-100bp compared to 1QFY2013 for the quarters going ahead. We have revised our estimates downwards and continue to maintain our Neutral stance on the stock.

Source : Equity Bulls

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