Buy Blue Star; target of Rs 2000: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Blue Star (BLSTR) reported a strong 2Q with revenue growth of ~21% driven by ~29% yoy growth in the Unitary Products (UP) segment.
  • EBITDAM improved to ~6.9% despite commodity cost pressures, with Management targeting ~25% full-year RAC growth.
  • To mitigate cost pressures, BLSTR has taken calibrated price hikes of >13%, with the balance to be mitigated via rejigging its product portfolio.
  • Management targets UP segment EBITM of 6-6.5% on full-year basis, implying >8% margins in 2H.

Thesis Validation Checklist

  • Investors should watch for demand outlook, margin performance, and cost inflation over the next ~12 months to validate the thesis.
  • Key signals include RAC demand growth, UP segment EBITM, and EMP and CAC margin performance.
  • Any deviation from the targeted growth and margin expansion could challenge the investment thesis.