Target: ₹1,825
CMP: ₹1,436.60
Blue Star Ltd (BLSTR) fared exceptionally well in Q3FY23, with revenues standing at ₹1,788.20 crore, registering a growth of 19 per cent on a YoY basis. EBITDA reported an increase of 22 per cent/16 per cent on a QoQ/YoY basis and stood at ₹104.70 crore, with an improvement in margin of 43bps. Q3 margins stood at 5.86 per cent, and PAT witnessed a sequential growth of 38.6 per cent on a QoQ basis and stood at ₹58.40 crore.
BLSTR’s segment-wise performance during Q3FY23 has also improved, the EMP & Commercial air conditioning systems (Segment I), registered a growth of 21 per cent on a y-o-y basis and stood at ₹100 crore. Unitary Products (Segment II) grew by 15 per cent YoY and stood at ₹70.20 crore. In contrast, Professional Electronics & Industrial Systems (Segment III) grew by 29 per cent on a y-o-y basis and stood at ₹8.6 crore.
We value Blue star at a target price of ₹1,825, with a PE of 50x using a forwarded EPS of ₹36.5 (FY24) owing to rapid expansion growth plan, expected relief in input cost pressure post relaxation in geo-political tension and early onset of harsh summer season leading us to believe the coming quarters would continue to maintain the same momentum.