INITIATING COVERAGE BUY CMP: `761 4TH JULY 2019 Blue Star Ltd. Strong brand image with growing market share Way2Wealth Brokers Pvt. Ltd. (CIN U67120KA2000PTC027628) SEBI Rgn. No. : INH200002739. No. 14, Frontline Granduer, Walton Road, Bangalore-560001; Website: www.way2wealth.com Email:
[email protected] Way2wealthResearch is also available on Bloomberg WTWL<GO> Blue Star Ltd. Initiating Coverage th July 4 , 2019 Nifty 11,947 Outperformer in the AC Industry with 12.3% of market share Sensex 39,908 Since entering into the room air-conditioner category in FY11, Bluestar (BLSTR) has Key Stock Data outperformed the industry by garnering 12.3% of market share. We continue to be optimistic on the growth prospects of the AC industry and the company considering low Reuters Code BLUS.NS penetration levels (5%), hot-humid conditions, rising affordability and disposable income as Bloomberg Code BLSTR.IN well as availability of consumer finance. We continue to see BLSTR to grow on the back of CMP ` 761 increasing distribution network, rising market share and a trend of higher proportion of sales Market Cap (` mn.) 73,265 moving towards inverter AC’s. Further, growth is aided by scale-up in commercial 52W High/Low 825/507 refrigeration production and turning around of water-purifier business. With priority of the 30-dayAvg Volume (mn) 3,109 current stable government towards infra space, the company is likely to witness health order book from large value contracts for the EMPS segment. Along with operating leverage benefit, in-house manufacturing of room AC’s and higher share of product and service Shareholding Pattern business in EMPS segment we are likely to see improvement in margin profile (+170 bps) Promoters 38.8 enabling earnings CAGR growth of 30% over FY19-21E.Over the next five years, BLSTR’s FIIs & DIIs 30.7 management has ambitious plan of growing revenues by 20% CAGR and profitability by Public & Others 30.5 25% CAGR.