Blue Star Ltd

Buy Blue Star With Target Of Rs 258

Blue Star LtdBlue Star Ltd’s (BSL) declared disappointing set of results. The net sales grew by 6.6% YoY to Rs7.03bn (PINCe Rs7.04bn). OPM contracted by 476bps to 3.7% on account of cost overrun in the Elec-Mech project division. This coupled with higher interest charges (+278% YoY) translated in a 74% fall in adj net profit to mere Rs98mn (PINCe Rs359mn).

Blue Star Ltd. Result Review by PINC Research

Blue Star Ltd. Result Review by PINC ResearchBlue Star Ltd’s (BSL) Q3FY11 results were disappointing and below our expectations as net sales grew by 4.2% YoY to Rs6.1bn (PINCe Rs9.7bn). OPM contracted by 210bps to 7.7% on account of higher other expenses. Lower operating margins coupled with higher effective tax rate (28.7% against 24.1% YoY) translated in a 37.4% fall in adj net profit to Rs224mn.

Subdued performance by Electro-Mech (MEP) segment: Revenues from MEP segment (contributes ~70% to topline) degrew by 4.9% YoY. PBIT margin for the segment contracted by

PINC Result Review – Blue Star Ltd.

Blue Star Ltd.Blue Star Ltd’s (BSL) Q2FY11 net sales grew by 25.2% YoY to Rs6.9bn against our estimate of Rs6.5bn. OPM contracted by 338bps to 8.5% on account of higher input cost and change in product mix (higher contribution of trading). Lower operating margins coupled with higher effective tax rate (31.1% against 24.2% YoY) led adj net profit to de-grew by 12.6% to Rs386mn lower than our estimate of Rs449mn.

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