Blue Star, a leading consumer durable company in India, has been on a bull run, with its stock price surging by 48% in the last 10 months. It also gained 64.29% from its 52-week low of ₹859 apiece.
Despite such strong gains, domestic brokerage firms have raised their target price on the stock and maintained a 'buy' rating, citing the company's impressive Q4FY23 earnings. The company on May 04 reported a 195% YoY rise in its consolidated net profit to ₹225.29 crore in the fourth quarter of FY23.
The consolidated revenue from operations during the reporting quarter stood at ₹2,624 crore, growing by 18.72% as against ₹2,254 crore in the year-ago period.
The revenue from its unitary products segment, which accounts for 50% of the company's total revenue, increased by 22.30% to 1,267 crore in Q4FY23, as compared to 1,036 crore in Q4FY22.
Similarly, electro-mechanical projects and commercial air conditioning systems revenue grew by 9.92% YoY to ₹1,252 crore in Q4FY23 compared to ₹1,139 crore in Q4FY22.
For the fiscal year ended March 31, 2023, the company's consolidated net profit was at ₹400.69 crore, an increase of 138.50% as compared to ₹168 crore in FY22. Revenue from operations for FY23 came in at ₹7,977.32 crore as compared to ₹6,064.08 crore in FY22.
Following the Q4FY23 performance, brokerage firm Phillip Capital maintained its 'buy' call on the stock and raised its target price to ₹1,712 apiece from ₹1,538 earlier. This new target price indicates an new all-time high for the stock.
"Blue Star's UCP business has outperformed peers in Q4FY23, and its EMP business has a robust order backlog along with the benefit of strong industry tailwinds," said BoB Capital Markets.
The brokerage raised its FY24 and FY25 EPS estimates by 6% and 4%, respectively, on the back of the strong quarterly performance and buoyant outlook for FY24. Upon rolling valuations forward to March 25E, the brokerage raises its target price to ₹1,650 apiece from an earlier price of ₹1,450.
On the market share front, the brokerage said that the company's cooling division grew 22% in the January-March period and currently has a 10% volume and 13.5% value market share with sales of 800,000 units. The company aims to sell 1 million units in FY24 and increase the value market share to 15% by FY25, it added.
Further, Blue Star is a leader in commercial refrigeration and sees scope for significant market share gains. The company plans to build scale, widen its deep freezer range, and enter into adjacencies such as retail, healthcare, and kitchens, it said.
Additionally, the company's electronics business, which generated ₹3.3 billion in revenue in Q4, is expected to surpass ₹10 billion with profits of over ₹1 billion in the medium term, according to the brokerage.
20 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
