Blue Star skids after Q4 PAT tumbles 89% to Rs 9 cr

Blue Star fell 0.23% to Rs 475 after consolidated net profit tumbled 88.85% to Rs 8.90 crore on 18.57% decline in net sales to Rs 1,299.36 crore in Q4 March 2020 over Q4 March 2019.

Operating profit (profit before interest, tax, depreciation and ammortisation (PBITDA) excluding other income and finance income) dropped 65.88% to Rs 37.33 crore during the quarter from Rs 109.44 crore in the same period last year, primarily due to lower profits resulting from significantly reduced sales in March 2020. The results was announced after market hours yesterday, 12 May 2020.

Revenue from operations maintained impressive growth momentum in line with the company's plans until the end of the third quarter of the financial year. The fourth quarter also started on track, however, the rapid spread of the COVID-19 pandemic across the globe resulted in significant demand and supply chain disruptions across India in the month of March. Further, the nationwide lockdown imposed by the government towards the end of March resulted in a complete shutdown of all operating activities. Order fulfillment suffered and consequently there was a significant impact on the company's billing and profitability in the fourth quarter of the financial year. The operating cash flow also slowed down significantly requiring swift actions to rebuild adequate liquidity on the company's balance sheet, so as to meet external obligations and commitments.

Commenting on the Q4 performance, Vir Advani, the vice chairman (VC) & managing director (MD) of Blue Star, said, "While the demand had taken a hit due to the national lockdown, we are hopeful that there will be gradual recovery from May 2020 onwards. With Tier 3, 4 & 5 towns, which are comparatively less impacted, accounting for close to 60% of the revenue for Unitary Products, we may partially make up for the lost summer season sales. The demand for our commercial refrigeration products, specifically from the healthcare, pharmaceuticals, processed food and food delivery sectors is growing. While two of our factories have opened with partial strength, we are planning to open the other 3 factories in June. Roughly 10% of project sites have also opened. While Q1FY21 will be a challenging quarter, given the strong fundamentals and diverse portfolio, the Company is well positioned to regain lost ground from Q2 onwards."

"Meanwhile, several cost reduction plans have been implemented along with liquidity improvement measures. Simultaneously, the Company is working on a few emerging opportunities, such as developing hi-tech indoor air quality management solutions and accelerating our indigenization plans in the post COVID-19 era. We are confident of emerging stronger from the current crisis," he added.

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, the board has also declared an interim dividend of Rs 10 per equity share of Rs 2 each in Q4 FY20.

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