BLUESTARCO - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 4.1

Here’s an in-depth fundamental review of Blue Star Ltd., a leading player in India’s air conditioning and commercial refrigeration segment with strong execution and premium branding

🧾 Core Financials & Profitability

EPS: ₹28.8 — solid earnings, consistent with profitable growth.

ROE: 20.6% | ROCE: 26.2% — exceptionally strong return metrics, demonstrating efficient capital deployment.

Debt-to-Equity: 0.12 — very conservative leverage; provides flexibility in tough cycles.

PAT Qtr Growth: ₹194 Cr vs ₹123 Cr — +21.2% growth; business momentum is robust.

Dividend Yield: 0.52% — small payout, signaling retention for growth expansion.

💰 Valuation Indicators

P/E Ratio: 61.3 — above industry average (53.3), suggesting premium valuation.

P/B Ratio: ~11.7 (₹1,745 ÷ ₹149) — stretched; signals high investor expectations.

PEG Ratio: 1.18 — indicates acceptable valuation relative to earnings growth.

Intrinsic Value Estimate: Likely ₹1,550–₹1,680, putting current price near fair-to-slightly-rich zone.

🌬️ Business Model & Competitive Advantage

Sector: Consumer durables with commercial AC leadership and engineering services.

Strengths

Strong presence in project engineering and data center cooling systems.

Robust brand trust across residential and corporate segments.

Diversification into water purifiers and air purifiers helps reduce cyclicality.

Risks

Heavy reliance on cyclical real estate and infrastructure demand.

Elevated P/E limits margin of safety for value investors.

Slight dip in FII holding (–0.73%) may reflect caution on valuation.

📊 Technical Indicators

RSI: 47.6 — neutral zone; momentum evenly balanced.

MACD: +14.8 — bullish trajectory, but volume weakening.

Volume: Underwhelming vs 1-week average — could signal indecision among investors.

🎯 Suggested Entry Zone

₹1,520 – ₹1,600: Accumulation range offering relative value near 52-week low.

Avoid chasing above ₹1,750, where valuation premium leaves less upside cushion.

📈 Long-Term Holding Guidance

Strong candidate for 5–7 year horizons, particularly for investors seeking

Leadership in energy-efficient cooling technologies.

Expansion into infrastructure-heavy sectors.

Compounding through brand loyalty and scale efficiency.

Want me to compare it against peers like Voltas or Johnson Controls-Hitachi to see how Blue Star stacks up in efficiency, market positioning, and valuation headroom? That could be a cool exercise. Literally. 😎

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