Blue Star - Deteriorating Fundamentals; Downgrade to Hold ::Emkay

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Blue Star

Deteriorating Fundamentals; Downgrade to Hold

HOLD

CMP: Rs 265                                       Target Price: Rs 280

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n     Blue Star (BLSR) reported its worst  EBITDA margins down 520 bps yoy and APAT down 73% yoy to Rs98 mn.performance  EMP&PAC segment posts EBIT loss of Rs89 mn

n     Order Inflow momentum continues – secures order inflows worth Rs8.5 bn (24% of FY12E target) – Only silver lining. Order book rises 7% qoq to Rs21.0 bn

n     BLSR has downplayed on margin expectation in EMP & PAC business, owing to cost escalation, foreclosures and completion of old projects. DER deteriorates further to 1.1X

n     Revised earnings downwards by 23% in FY12E and 19% in FY13E. Downgrade to Hold with revised price target of Rs280 per share. Benign commodity prices is key upside to earnings