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Kotak Securities
Blue Star (Accumulate)
CMP: ₹649.05
Target: ₹684
Blue Star is India’s leading air conditioning and commercial refrigeration company, with an annual revenue of over ₹4,400 crore, a network of 35 offices, five modern manufacturing facilities, 2,700 employees, 2,200 dealers and 600 retailers.
In our recent meeting, the management has highlighted that the offtake of room ACs DS weakened in the month of May. This has led it to revise its growth expectations for the room AC sales in Q1FY18 and FY18 respectively. In view of this, we have revised our earnings forecast and target price to ₹684 (₹727 earlier).
We have been bullish on Blue Star as we believe that the room AC sector offers potential for an extended period of high growth due to rising disposable incomes and under-penetration of product within the consumer durable basket. The stock has rallied strongly in the past six months and in view of the minor upside, we maintain ‘Accumulate’, thereby advising investors to buy the stock on declines.
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