Neutral on Blue Star\, target price Rs 460: Motilal Oswal

Motilal Oswal has given neutral rating to Blue Star with a target price of Rs 460. The share price moved up by 2.52 per cent from its previous close of Rs 483.95. The stock’s last traded price is Rs 497.

Blue Star Ltd., incorporated in the year 1949, is a Mid Cap company (having a market cap of Rs 4770.43 Crore) operating in Consumer Durables sector.

Financials
For the quarter ended 31-03-2020, the company reported a Consolidated sales of Rs 1299.36 Crore, up 5.13 % from last quarter Sales of Rs 1235.91 Crore and down -18.58 % from last year same quarter Sales of Rs 1595.84 Crore. Company reported net profit after tax of Rs 8.38 Crore in latest quarter.

Investment Rationale
Over FY20-22E, the brokerage expects revenue/EBITDA/PAT to grow 3.6%/10.3%/10.7%. FY21E is expected to be a washout year. However, it notes that margin volatility in the case of BLSTR poses a challenge to our earnings forecast, thereby leading to sharp earnings downgrade. The SOTP-based TP stands at Rs 460/share and it maintains Neutral.

Promoter/FII Holdings
Promoters held 38.8 per cent stake in the company as of June 30, 2020, while FIIs held 8.8 per cent, DIIs 23 per cent and public and others 29.5 per cent.