For 1QFY2019, Blue Star posted results below our expectations on the top-line, however, it reported healthy growth on the bottom-line front. The company has reported flat top-line growth (after adjustment of GST, revenue growth was ~7%) and PAT was up ~20% yoy.
Outlook & Valuation: We forecast Blue Star to report top-line CAGR of ~13% to `5,955cr over FY18-20E on the back of healthy demand growth in Air Conditioning and Unitary Products division. On the bottom-line front, we estimate ~19% CAGR to `205cr owing to improvement in volumes and better operating
margins. We maintain our Buy recommendation on Blue Star with a target price of `867.
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