Hold Blue Star - Emkay

Reco: HOLD
CMP: Rs 171
Target Price: Rs 185

Positive catalysts gain prominence; Retain Hold

- Blue Star reports net loss of Rs328 mn in Q3FY12 – along expected lines. Loss due to (1) 4% decline in revenues (2) 680bps yoy fall in gross margins (3) forex loss of Rs138 mn

- Key positive – Net working capital cycle comes down from +200 days to 180 days. Debt reduces by Rs1.6 bn qoq to Rs4.6 bn

- Positive catalysts gain prominence (improvement in profitability from FY13E – EBITDA margin and ROE, balance sheet strengthening)

- But BLSR expected to under-perform in near term amidst concern on profitability in near term. Cut earnings estimates to factor same. Retain Hold rating with price target of Rs185.

Source : Equity Bulls

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