Reviews

In this edition, we have reviewed Blue Star and Essel Propack. We suggest our reader-investors to HOLD Blue Star and Essel Propack.



We had recommended Blue Star Ltd in volume 33, issue no 9 dated April 30-May 2018, under ‘Choice Scrip section when the stock was trading at Rs.785. The recommendation was justified on account of the robust products launched (100 products) by the company due to which the company was expecting to generate almost Rs.1700 crore in revenue. Apart from this, the company had announced its partnership with Sands International to be the official distributor in KSA for its unitary products range.

Blue Star is an air-conditioning and refrigeration company. Its primary business segment comprises electromechanical project and packaged air conditioning systems (EMPS); unitary products and professional electronics and industrial systems.


On financial front, Blue Star's consolidated revenue for the quarter came in at Rs.1475.88 crore, registering an increase of 7.3 per cent YoY. The company's EBITDA for the quarter rose by 19.4 per cent YoY to Rs.90.2 crore with a corresponding margin expansion of 62 bps. Its EBITDA margin for the quarter stood at 6.1 per cent. Notably, the company's net profit for the quarter registered substantial increase of 36 per cent to Rs.51.8 crore over the corresponding quarter of previous year.

On an annual basis, the revenue for FY18 rose almost 8 per cent YoY to Rs.4741 crore. Also, the EBITDA for the full year rose 13.3 per cent YoY to Rs.276 crore, with corresponding margin improvement of 30 bps. The company's net profit surged 21.3 per cent YoY to Rs.149 crore.

After our recommendation, the stock has fallen almost 16 per cent. However, the company has posted strong bottomline growth during the quarter and on an annual basis. We believe with healthy quarterly numbers, the stock is expected to bounce back. Thus, we recommend our reader-investors to HOLD the stock.

 We had recommended Essel Propack Limited (EPL) in volume 33, issue no. 6 dated Feb 19—March 4, 2018 under ‘Cover Story' section when the stock was trading at Rs.140. Our recommendation was backed by the company's higher expected growth in Europe and its launch of new product and capacity expansion. EPL is the largest specialty packaging company in the world with a global presence in 12 countries. The company is engaged in production of plastic packaging material in the form of multilayer collapsible tubes and laminates used mostly for the packaging of beauty and cosmetic products, pharma and healthcare products, food and other industrial needs.

On the financial front, Essel Propack's revenue for Q4FY18 has decreased marginally by 2 per cent to Rs.212 crore as against Rs. 218 in Q4FY17. The company's PBDT rose by 32 per cent to Rs.53 crore in Q4FY18 from Rs.40 crore in Q4FY17. The net profit of the company has jumped by 50 per cent to Rs.24 crore in Q4FY18 as against Rs.16 crore in Q4FY17 .

On the annual front, the revenue of the company has remained stable at Rs.864 crore in FY18 as against Rs.881 crore in FY17. The PBDT of the company has grown by 23 per cent to Rs.190 crore in FY18 from Rs.154 crore in FY17. The net profit of the company has grown by 25 per cent to Rs.81.18 crore in FY18 as against Rs.65 crore in the previous fiscal.

After our recommendation, although the share price of the company has decreased by over 26 per cent, the financial data show overall growth.

Thus, we would recommend our reader-investors to HOLD the scrip.

(Closing price as on July 16, 2018) .