Blue Star bucks weak trend after decent Q4 outcome

Blue Star gained 1.35% to Rs 1,106 in a weak market after the company's consolidated net profit rose 12% to Rs 76.16 crore on a 39.5% increase in the net sales to Rs 2,247.58 crore in Q4 FY22 over Q4 FY21.

Good demand for the company's offerings across all business segments coupled with an early onset of summer in some parts of the country helped Blue Star register a robust revenue growth.

Profit before tax was up by 9.2% to Rs 113.91 crore in Q4 FY22 from 104.32 crore posted in Q4 FY21. Revenue growth and improvement in profitability across segments enabled operating profit (PBIDTA excluding other income and finance income) to increase to Rs 142.95 crore (6.4% of revenue) in Q4 FY22 from Rs 101.81 crore (6.3% of revenue) in Q4 FY21.

Finance cost for the quarter declined 3.5% to Rs 12.93 crore in Q4 FY22 over Q4 FY21.

On segmental front, revenue of the Electro-Mechanical Projects and Commercial Air Conditioning Systems business grew by 45.6% to Rs 1,135.97 crore in Q4 FY22 compared to Rs 779.96 crore in Q4 FY21 driven by the revival of the construction cycle and the improved pace of execution. Unitary Products revenue grew by 32.3% to Rs 1,034.01 crores in Q4 FY22 compared to Rs 781.81 crores in Q4 FY21. The Professional Electronics and Industrial Systems business revenue grew by 55.8% to Rs 77.60 crores in Q4 FY22 compared to Rs 49.79 crores in Q4 FY21.

On full year basis, the company reported a 67.1% rise in net profit to Rs 167.71 crore on a 41.8% increase in the net sales to Rs 6,045.58 crore in the financial year ended 31 March 2022 as compared with the previous year.

Commenting on the future outlook, Vir S. Advani, vice chairman & managing director of Blue Star said, With the ebbing of the pandemic impact, the business and market disruptions have progressively reduced, aiding growth and revival of opportunities. After the washout of two consecutive summers, we are witnessing strong demand for room air conditioners in Q1 FY23. With the launch of our new 'Affordable Premium' range of room air conditioners, we are growing faster than the market. The market for commercial refrigeration products is also growing, and with a wide range of offerings across various segments such as ice cream, pharma, horticulture, and food delivery, Blue Star is well placed to consolidate its leadership position. With the increase in corporate CAPEX and revival of demand from traditional customer segments, prospects for growth in the Electro-Mechanical Projects and Commercial Air Conditioning business are encouraging.

Given the ongoing geopolitical conflict between Russia and Ukraine, input cost pressure and supply chain challenges are expected to continue for a while. However, we have taken adequate measures to mitigate the risks. Our cost optimization initiatives and prudent working capital management will help us to sustain growth, profitability, and a strong balance sheet. We are confident of building on the momentum gained in Q3 FY22 and Q4 FY22 into Q1 FY23 and the subsequent quarters Vir Advani added.

The board recommended a final dividend of Rs 10 per equity share for the financial year ended 31 March 2022.

Blue Star is an air-conditioning and commercial refrigeration company. The company conducts various activities, such as electrical, plumbing and fire-fighting services. Its segments include electro-mechanical projects and packaged air conditioning systems, and unitary products.

Meanwhile, key equity indices traded near the day's low with steep losses, mirroring negative global cues. The barometer index, S&P BSE Sensex was down 889.67 points or 1.6% to 54,812.60.

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