Recommendations from Consumer Electronics & Other Elect.Equip./ Prod.
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
BLUE STAR
CMP - Rs 828.15
BSE CODE 500067
Volume 1,875
Face Value Rs 2
Target Rs 890
Stoploss Rs 780(CLS)
Blue Star is an air-conditioning and commercial refrigeration company, engaged in various activities, such as electrical, plumbing and fire-fighting services. The company's products include central air conditioning, room air conditioners and speciality cooling products. On the consolidated quarterly front, the revenue from operations for Q2FY20 was reported at Rs 1,249.47 crore as compared to Rs 1,032.20 crore in Q2FY19, a growth of 21.0 per cent. The EBITDA (excluding other and financial income), was reported at Rs 73.58 crore in Q2FY20 as compared to Rs 58.07 crore in Q2FY19. Net profits saw a massive surge of growth of 94.1 per cent in Q2FY20 to Rs 37.94 crore from Rs 19.55 crore in the same quarter for the previous fiscal year. On the back of a healthy order book and backed by the companies enhanced distribution reach, there has been an improvement in sales of cooling products. We recommend a BUY for Blue Star.
POLYCAB INDIA
CMP - Rs 993.25
BSE CODE 542652
Volume 7,775
Face Value Rs 10
Target Rs 1,070
Stoploss Rs 940 (CLS)
Polycab India is a dominant player in India’s cables and wires market for retail and institutional buyers. Polycab got listed recently on BSE and NSE for the first time ever, i.e., on April 16, 2019. Its IPO of Rs 1,345.3 crore was subscribed 52 times, which is an overwhelming response according to the management of the company. Looking at the quarterly trends on consolidated basis, for Q2FY20, the company reported net sales of Rs 2,241.94 crore, an increase of 23.74 per cent as against the net sales of Rs 1,811.86 crore for Q2FY19. PBDT also expanded by 54.49 per cent for the Q2FY20 and was Rs 271.44 crore, as compared to Rs 178 crore for Q2FY19. In Q2FY20, net profit doubled to Rs 195.41 crore when compared to Rs 92.55 crore in Q2FY19. Polycab India is expected to maintain a strong revenue growth trajectory led by leveraging distribution strength and launch of new products within existing categories. Rising cash flows in coming years may lead to an upward revision in capital expenditure along with a probability of higher shareholder returns through dividends. Hence, we recommend a BUY.