For 4QFY2018, Blue Star posted results in-line with our expectations both on top line and bottom-line fronts. The revenue was higher by 7.8% y-o-y and PAT was up 27.4% y-o-y. During the quarter, cooling and the unitary products has been the key performer for the company. Operating margin improved by 87bps on account of lower material costs.

Outlook & Valuation: We forecast Blue Star to report top-line CAGR of ~13% to `6,080cr over FY18-20E on the back of healthy demand growth in Air Conditioning and Unitary Products division. On the bottom-line front, we estimate ~21% CAGR to `213cr owing to improvement in volumes. We maintain our Buy
recommendation with a target price of `867.

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