t i n g C o ve ra ge
Sector
NSE Code
Rs. 250
500067
BLUESTARCO
Bloomberg Code
BLSTR IN
Market Cap (Rs cr)
1790
Free Float (%)
60
52- wk HI/Lo (Rs) Avg. volume BSE (Quarterly)
231/151 16429
Face Value (Rs)
2
Dividend (FY 12)
50%
Shares o/s (Crs)
8.9
Relative Performance
1Mth
3Mth
1Yr
Blue Star Sensex
12.6%
6.9%
-7.6%
-0.2%
10.8%
11.4%
240 220 200 180 160
140
Aug
Jun
Apr
Dec
Feb
120 Blue Star
th
Shareholding Pattern
30 Sep 12
Promoters Holding
40.09%
Institutional (Incl. FII)
24.67%
Corporate Bodies Public & others
2.19% 33.05%
Amish Pansuria (+91 22 3926 8174) Research Analyst (
[email protected])
Inline Performance, External Environment a Concern Revenues for the quarter were at Rs. 579 cr, down by 4%, YoY. EBITDA for the quarter was Rs. 20 cr, up 48%, YoY. EBITDA margin improved by 123 bps YoY to 3.5%. On QoQ basis EBITDA was down by 80%. Interest expenses for the quarter decreased significantly to Rs 11.20 cr from Rs 30.56 cr in Q2FY12. PAT for the quarter was Rs. 7.2 cr as compared to a loss of Rs 21 cr in Q2FY12. PAT margin for the quarter was 1.2%. On QoQ basis PAT was down by 78%.
ge
Rs. 199
Consumer Electronics
Stock Details BSE Code
BUY
rage
Target Price
verage
CMP (23/10/2012)
C overage
g C ove ra ge
tiating C overage
Recommendation
Oct
Q 2 F Y 1 3 R e s u l t U p d a t e – 2 5 O cItn i2t i0a1 t i2n g C o v e r a g e
4
Blue Star Ltd
The revenues of EMP and PAS business, accounting for 65% of the total revenues in the quarter decreased by 2%, while EBIT increased to Rs 26.42 cr as compared to a loss of Rs 3.41 cr during Q2FY12, due to the focus on: (1) business from more profitable segments and at better margins and (2) the benefit of lower cost increases in ongoing projects in the current year. Cooling Products revenue registered a modest increase of 8% in the quarter, while EBIT declined by 6.7% to Rs 7.91 cr. The decline was mainly due to increase in input costs owing to foreign exchange rates and erosion of margins in sourcing and selling of installation accessories such as copper pipes. The PE&IS business revenues reduced significantly by 43%, while EBIT declined 85% to Rs 2.63 cr, due to the unfavourable industrial projects business and declining demand in capital goods sector, and delay in finalization of a few significant new orders. The order book at the end of the quarter was Rs. 1678 cr which saw a drop 22.4%, YoY. This was mainly to low order inflows and debooking of orders worth Rs 200 cr which were slow moving or dormant for more than a year. The management has guided for order inflow to remain at same level of FY12 with H2FY13 expected to see higher inflow as compared to H1FY13. Valuation & Recommendation We have recommended Blue Star as a theme story for more and more desire for air conditioning by both household and commercial sector. We feel the poor environment on demand side and a poor performance by the company in FY12 on account of various MTM losses in project business and corresponding decline in share price offers great opportunity to enter the stock with a long term perspective. The company has a consistent track record of over 20% growth and high return ratios in previous up cycles of the economy. We feel with the revival of economy this company has potential to give similar growth. The company has returned to profitability in H1FY13; however the external environment continues to remain a concern leading to low order inflows. We expect the performance to remain subdued in the coming quarters and order inflow for H2FY13 will remain a key variable which will set up the company’s FY14 growth prospects. The focus on profitability will lead to better margin performance in FY13 & FY14. At CMP, the stock trades at 12.8x its FY14E EPS and 0.6x its FY14E EV/Sales. We maintain BUY with a target price of Rs 250.
Year
Net Sales (Rs cr)
Growth (%)
EBITDA (Rs cr)
EBITDA Margin (%)
PAT (Rs cr)
PAT Margin (%)
EPS
P/E (x)
EV/EBITDA (x)
RoE (%)
FY 11A FY 12A FY 13E FY 14E
2967 2820 2995 3299
18 -5 6 10
254 -23 162 262
8.5 -0.8 5.4 8.0
158 -105 79 139
5.3 -3.7 2.6 4.2
17.6 -11.6 8.8 15.5
11.3 -17.1 22.6 12.8
8.6 -92.6 13.0 7.9
31.0 -26.5 17.1 23.9
1|Page
ge
rage
Q2FY13 – Result Update Q2FY13 Q1FY13 Q-o-Q Q2FY12 Y-o-Y Net Revenue 579 1,364 -58% 605 -4% Operating Exp. 558 1,261 -56% 591 -6% EBITDA 20 103 -80% 14 48% EBITDA (%) 3.5% 7.6% -407 bps 2.3% 123 bps Depreciation 8.2 12 -34% 8.0 2% EBIT 12.0 91 -87% 5.6 114% EBIT (%) 2.1% 6.6% -458 bps 0.9% 114 bps Interest 11 40 -72% 31 -63% Other Income 6.47 2.76 134% 1 567% Exceptional Items 0 0 NA 0 NA PBT 7 53 -86% -24 NA Tax Provision 0 20 -100% -3 NA Tax Rate (%) 0.0% 38.3% NA 13.2% NA Reported PAT 7 33 -78% -21 NA PAT (%) 1.2% 2.4% -117 bps -3.4% 468 bps EPS 0.8 1.3 -37% -2.31 NA
verage
C overage
g C ove ra ge
t i n g C o ve ra ge
tiating C overage
Q 2 F Y 1 3 R e s u l t U p d a t e – 2 5 O cItn i2t i0a1 t i2n g C o v e r a g e
Blue Star Ltd
Source: Company, Nirmal Bang Research
Segment Revenues EMP & PAS Cooling Products PE & IS Total PBIT EMP & PAS Cooling Products PE & IS Total
Q2FY13 Q1FY13
Q-o-Q Q2FY12
YoY
375.9 168.6 34.1 578.6
367.1 333.6 30.8 731.4
2.4% -49.4% 10.8% -20.9%
382.5 156.9 59.4 598.8
-2% 8% -43% -3.4%
26.4 7.9 2.6 36.9
12.4 37.6 7.2 57.1
113.4% -78.9% -63.4% -35.3%
-3.4 8.5 17.3 22.4
NA -6.7% -84.8% 65.0%
Source: Company, Nirmal Bang Research
Order Book Trend 2500 2000 1500
1000 500 0 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY12 Q2FY13
Order Book (Rs. Cr)
Order Inflow (Rs Cr)
Source: Company, Nirmal Bang Research
The carry forward order book has seen a constant decline over last 4 quarters as the business environment gets tougher and the company continues with its strategy to pursue profitable business at the expense of growth.
2|Page
ge
rage
Key Highlights Order booking for the quarter was Rs 620 cr The company has de-booked orders worth Rs 200 cr which were slow moving or dormant for more than 12 months Is seeing positive levels of inquiries from IT & ITeS, Commercial complexes and Industrial for its projects business The management expects order inflows to improve in H2FY13 as some of the large infrastructure projects get finalized Overall demand for room ACs remains flat The management expects big opportunity in the cold storage segment on the back of FDI in retail. However it will take atleast 18-24 months before inquiry levels start flowing in. The estimated opportunity in cold storage is expected to be around Rs 25000 cr spread over 5 years The company has maintained its strategy to compromise on volumes and focus on profitability
verage
C overage
g C ove ra ge
t i n g C o ve ra ge
tiating C overage
Q 2 F Y 1 3 R e s u l t U p d a t e – 2 5 O cItn i2t i0a1 t i2n g C o v e r a g e
Blue Star Ltd
3|Page
% change EBITDA
Depreciation
Other Income
2976.1
2819.9
18%
-5%
254.4
31.9
FY13E
2995.2
FY14E
ge
FY12A
rage
Revenues - Net
FY11A
verage
Y/E - March
C overage
Profitability (Rs. Cr)
g C ove ra ge
t i n g C o ve ra ge
tiating C overage
Q 2 F Y 1 3 R e s u l t U p d a t e – 2 5 O cItn i2t i0a1 t i2n g C o v e r a g e
Financials
Blue Star Ltd
Financial Health (Rs. Cr)
FY11A
FY12A
FY13E
FY14E
Y / E - March
3299.3
18.0
18.0
18.0
18.0
Reserves & Surplus
493.26
377.35
446.03
564.06
262.3
Net Worth
511.24
395.34
464.02
582.04
39.6
Total Loans
444.5
367.0
381.7
360.0
Total Liabilities
955.8
762.4
845.7
942.0
Net Fixed Assets
222.5
238.5
252.7
263.1
0.7
0.2
0.2
0.2
6%
10%
-22.7
161.7
31.8
35.8
Share Capital
33.8
23.2
25.5
26.0
256.3
-31.3
151.4
248.7
0.4
0.0
0.0
0.0
25.6
72.1
52.4
50.1
Investments
27.2
27.5
27.5
27.5
PBT
231.1
-103.4
99.0
198.7
Inventories
404.3
446.7
449.3
461.9
Tax
72.8
1.2
19.8
59.6
Sundry Debtors
820.6
836.2
838.7
890.8
PAT
158.3
-104.6
79.2
139.1
52.4
53.7
63.6
67.2
9.0
9.0
9.0
9.0
146.5
110.2
127.3
138.6
EPS
17.6
-11.6
8.8
15.5
Other Current Asset
533.1
371.9
404.3
445.4
Dividend
63.0
9.0
9.0
18.0
Current Liab & Prov
1251.6
1322.6
1317.9
1352.7
7.0
1.0
1.0
2.0
955.8
762.4
845.7
942.0
Sep-11
Dec-12
Mar-12
Jun-12
FY11A
FY12A
FY13E
FY14E
604.7
589.7
813.6
731.4
EBIT
Exceptional Item Interest
Shares o/s ( No.in Cr.)
DPS Quarterly (Rs. Cr) Revenue
Deferred Tax Assets
Cash Loans & Advances
Total Assets Cash Flow (Rs. Cr) Operating
EBITDA
13.6
-3.1
-37.4
33.5
Operating Income
Interest
30.6
22.1
9.4
12.5
Change in WC
Dep
8.0
8.1
8.2
7.5
Other Inc.
1.0
0.6
10.4
7.0
Extraordinary
0.0
0.0
0.0
0.0
CF from Operation
PBT
-24.0
-32.8
-44.7
20.5
Tax
-3.2
0.0
0.7
0.0
PAT
-20.8
-32.8
-45.4
20.5
-2.3
-3.6
-5.0
2.3
EPS (Rs.) Operational Ratio
254.4
-22.7
161.7
262.3
-321.6
210.5
-59.3
-82.3
Taxes Paid
-72.8
-1.2
-19.8
-59.6
Other Adj
-2.5
0.5
0.0
0.0
-142.4
187.1
82.7
120.4
Capex
-50.5
-47.8
-50.0
-50.0
Other Investment
-23.0
-0.3
0.0
0.0
Total Investment
-73.6
-48.1
-50.0
-50.0
Investment
FY11A
FY12A
FY13E
FY14E
EBITDA margin (%)
8.5%
-0.8%
5.4%
8.0%
Dividend Paid
-73.2
-10.5
-10.5
-21.0
PAT margin (%)
5.3%
-3.7%
2.6%
4.2%
Share Capital
0.0
0.0
0.0
0.0
Price Earnings (x)
11.3
-17.1
22.6
12.9
Premium / Reserve
-65.6
-0.8
0.0
0.0
Book Value (Rs.)
Financing
56.8
44.0
51.6
64.7
Borrowing
378.5
-77.5
14.7
-21.7
ROE (%)
31.0%
-26.5%
17.1%
23.9%
Interest
-25.6
-72.1
-52.4
-50.1
ROCE (%)
26.8%
-4.1%
17.9%
26.4%
Other Income
33.8
23.2
25.5
26.0
Debt Equity Ratio (x)
0.9
0.9
0.8
0.6
Total Financing
248.0
-137.8
-22.7
-66.8
Price / Book Value (x)
3.5
4.5
3.9
3.1
Net Chg. in Cash
32.0
1.2
9.9
3.6
EV / EBIDTA (x)
8.6
-92.6
13.0
7.9
Cash at beginning
20.4
52.4
53.7
63.6
0.73
0.75
0.70
0.63
Cash at end
52.4
53.7
63.6
67.2
EV/Sales
Source: Company, Nirmal Bang Research
4|Page
ge
rage
verage
C overage
g C ove ra ge
t i n g C o ve ra ge
tiating C overage
Q 2 F Y 1 3 R e s u l t U p d a t e – 2 5 O cItn i2t i0a1 t i2n g C o v e r a g e
Blue Star Ltd
Notes
Disclaimer: This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities PVT LTD). The information, analysis and estimates contained herein are based on Nirmal Bang Research assessment and have been obtained from sources believed to be reliable. This document is meant for the use of the intended recipient only. This document, at best, represents Nirmal Bang Research opinion and is meant for general information only. Nirmal Bang Research, its directors, officers or employees shall not in any way be responsible for the contents stated herein. Nirmal Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection. This document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang Research, its affiliates and their employees may from time to time hold positions in securities referred to herein. Nirmal Bang Research or its affiliates may from time to time solicit from or perform investment banking or other services for any company mentioned in this document.
Nirmal Bang Research (Division of Nirmal Bang Securities PVT LTD) B-2, 301/302, Marathon Innova, Opp. Peninsula Corporate Park Off. Ganpatrao Kadam Marg Lower Parel (W), Mumbai-400013 Board No. : 91 22 3926 8000/8001 Fax. : 022 3926 8010
5|Page