Blue Star - Disciplined Pricing To Ensure Margin Protection: Nirmal Bang

Nirmal Bang Report

We hosted the manangement of Blue Star Ltd. at our investor conference. Their commentary was quite bullish on the RAC space.

• While RAC volume grew strongly in both April-24 and May-24, both CAC and MEP businesses saw moderate growth mainly on account of slowdown in private capex amid general elections. Order book looks strong for Q2 FY25 and Q3 FY25.

• The management expects the RAC market to consolidate in the medium term, with top five-six players contributing ~80% to the total market share.

• We draw high comfort from its business model due to its strategy of chasing profitability and free cash flow, presence in high growth Commercial Refrigeration and high-quality order booking from EMPS. We remain structurally positive on its long-term business prospects. We believe it is a long-term compounder and therefore it should be accumulated at every dip. Currently, due to sharp runup in the stock price, we have maintained Accumulate with SOTP-based target price of Rs 1,505 (44 times blended PE on FY26E earnings per share).

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