Blue Star's may take price hike - Angel Broking

As per media reports, Blue Star plans to increase prices of its air conditioners up to 5 percent in addition to its earlier price hike of 6 percent in 1QFY2014. This price hike will help in maintaining its operating margins by offsetting the impact of the weak rupee and additional cost to comply with changes in energy efficiency ratings norms. As per the Bureau of Energy Efficiency, the energy efficiency ratio for all star bands would go up from January 1, 2014. Compliance with new energy efficiency ratio norms will increase costs for the companies. In order to maintain its margins, company has to pass on the cost to its customers and hence we do not expect material change to our estimate.

We maintain our buy recommendation on the stock with the target price of Rs. 208 based on a target EV/sales of 0.7x for FY2015E.

Source : Equity Bulls

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