Neutral Blue Star; target of Rs 1510: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Blue Star's revenue grew ~21% YoY to INR29.3b, driven by PES/UCP/EMPS growth of ~51%/29%/16%.
  • The company expects RAC revenue to grow ~25% in FY27, with a target of achieving at least ~6.5% full-year UCP margin.
  • Data center projects are expected to deliver EBIT margins of ~10%-12%, with the overall EMPS segment margin guidance maintained at ~7%-7.5%.
  • The company has secured ~INR20b of data center orders and expects another ~INR20b in 2HFY27, with order bookings targeted to reach ~INR80b by FY30.

Thesis Validation Checklist

  • Watch for signs of margin recovery, driven by price revisions, product cost optimization, and operational efficiencies.
  • Monitor the growth of the data center business and its contribution to the EMPS segment.
  • Track the company's ability to achieve its target of ~6.5% full-year UCP margin.
  • Keep an eye on the overall industry trends, including demand for unitary cooling products and electro-mechanical projects and services.