We continue to maintain our estimates and expect a CAGR earning growth of 20% over FY19-21E on the back improvement in sales of cooling products and realignment of order execution by the company in the EMPS segment enabled by better working capital management. We are positive on the back of improving margin profile, return ratios and increasing market share. We maintain our BUY with a target price of Rs 833(P/E 25x FY21E)
In terms of valuation, the stock is trading at 34.4x and 25.9x FY20E and FY21E earnings. In view of the earnings revision in FY21E, our price target stands revised to Rs 747 (Rs 713 earlier). In view of positive outlook on Room ACbusiness but offset by premium valuations, we recommend “ADD” as upside ismodest.
The company has good distribution outreach both domestic and international, favourable market position and product-mix (both in UCP and EMPS), good return ratios, consistent strong cash flows and a sustainable leverage position enabling to provide good RoE and EPS growth prospects over the long run. Hence, we initiate coverage with a BUY rating and a target price of `899 (P/E 27x FY21E)
Looking ahead, we expect BLSTR’s revenue and earnings to clock 13% and 14% CAGR, respectively through FY19-21E. At CMP, the stock trades at 32.3x FY20E and 27.5x of FY21E earnings. We are positive on BLSTR on the back of improving margins, healthy balance sheet, low debt, improving return ratios and improving market share. We maintain our BUY recommendation on the stock with an upwardly revised Target Price of Rs829 (from Rs806 earlier), valuing the stock at 33x FY21 earnings.