2026-07-11 09:05:34
Latest Post
Innovision Ltd receives LoA worth Rs. 9.23 crores
Actian Expands Data Management Portfolio with Jaspersoft Embedded Analytics and Reporting
Jayant Infratech Ltd receives order worth Rs. 13.31 crores
Uno Minda announces Greenfield Plant in Chhatrapati Sambhaiinagar with Rs. 320 Crore Investment
Siyaram Recycling Industries Ltd secures order worth Rs. 36.95 lakhs
Research
Blue Star - Reduce target price - Angel Broking
Posted On : 2012-12-27 20:14:22( TIMEZONE : IST )
The positive impulse sensed by Blue Star's management earlier in 1QFY2013 has faded now with a deteriorating macro scenario. Some unexpected developments on the order book front and execution level are the prime reasons for the pessimistic outlook. We maintain our Buy recommendation on the stock with a reduced target price of Rs.224.
The key takeaways from the meet are as follows
- Order inflow for Blue Star is expected to decline by more than 30% in FY2013E as against the expectation of a decline of 20-25%. This is primarily on the back of company's stance to book selective high margin orders. Delay in order finalization has added to the deteriorating scenario.
- Concerns on profitability of the Delhi/ Bangalore metro railway project have arisen on account of involvement of more players than expected, in the project.
- The debt is expected to reduce by Rs.20cr only for FY2013E, much below the previous expectation of Rs.75cr, due to lack of cash generation from the EMPPACS segment.
- The Services and Cooling Products business continues to perform well with most categories in the segment expected to post a 10% growth for FY2013E. However, this would be just enough to offset the adverse impact inflicted by the ailing EMPPACS business.
- Concerns on the debtor front relating to delayed payments continue to persist.
- The PEIS segment is expected to continue to face pressure due to slowdown in capex cycle. On the whole, the management expects the harsh conditions to continue for a little longer than previously expected.
Outlook and Valuation: We have revised our revenue estimated downwards for FY2013E and FY2014E by 8.1% and 9.0% respectively owing to declining order flow, low execution rate and negligible pickup in capex cycle. However, the net profit is expected to improve on the back of improving EBITDA margin. At the current market price, the stock is trading at EV/Sales of 0.7x for FY2014E. We maintain our Buy recommendation on the stock with a reduced target price of Rs.224 based on a target EV/sales of 0.8x for FY2014E.
