Views on Blue Star 3QFY2016 Results: Angel Broking

Views of Mr. Milan Desai (Research Analyst - Mid Caps, Angel Broking) on Blue Star 3QFY2016 results:

3QFY2016 numbers broadly in-line with estimates

"Blue Star reported 3QFY2016 numbers that were broadly in line with our estimates. The standalone top-line for the quarter reported an impressive 15.1% YoY increase to INR 686cr. This is above our estimate of INR 641cr. Both Electro Mechanical Projects and Packaged Air-conditioning Systems (EMPPAC) business and Cooling Products business reported healthy growth of 21.5% YoY and 21.0% YoY to INR 439cr and INR 238cr respectively. The PEIS business top-line came in at INR 9cr against INR 38cr in 3QFY2015. However YoY comparison for PEIS business is not reasonable as the segment has been transferred to Blue Star's subsidiary, BSEEL.

On operating front; the EBITDA margins expanded by 259bp YoY to 4.1% which is in line with our estimate of 4.0%. The raw material cost as a percentage of sales increased by 175bp YoY to 68.9% but this was made up by 94bp YoY and 341bp YoY decline in Employee and Other expenses to 9.7% and 17.4%, respectively. The EBIT margins for EMPPAC, Cooling Products and PEIS were 5.8%, 7.1% and 18.7% respectively. There was an exceptional loss of INR 2cr during the quarter due to bonus expenses for earlier years pursuant to retrospective amendment in the statute. Adjusting for exceptional item, the net profit came in at INR 7cr which is marginally below our estimate of INR 8cr.

We remain positive on the stock as its RAC business continues to outperform the market by 10% points and continues to gain market share. Also, the performance of the EMPPAC business is showing gradual improvement which should also aid growth. We maintain our BUY rating on the stock."

Shares of BLUE STAR LTD. was last trading in BSE at Rs.368 as compared to the previous close of Rs. 355.05. The total number of shares traded during the day was 1030 in over 114 trades.

The stock hit an intraday high of Rs. 368 and intraday low of 352.25. The net turnover during the day was Rs. 369348.

Source : Equity Bulls

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