BLUESTARCO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.7

📊 Core Financials

• Quarterly PAT declined from 109 Cr. to 69.9 Cr. (-17.4%).
• ROE at 18.2% and ROCE at 22.8% indicate strong profitability and capital efficiency.
• Debt-to-equity ratio of 0.41 shows moderate leverage, manageable but worth monitoring.
• Dividend yield at 0.49% provides modest shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 84.7 vs Industry PE of 49.3 → Overvalued compared to peers.
• P/B Ratio: Current Price / Book Value ≈ 12.8 → Expensive relative to assets.
• PEG Ratio: 1.49 → Indicates moderate growth potential but valuation is stretched.
• Intrinsic Value Zone: ₹1,600–₹1,700 (near DMA 200).

🏭 Business Model & Competitive Advantage

• Core operations in air conditioning, refrigeration, and commercial cooling solutions.
• Strong brand recognition in consumer and commercial cooling markets.
• Competitive advantage lies in diversified product portfolio and established distribution network.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹1,600–₹1,700.
• Long-Term Holding: Suitable for investors seeking exposure to consumer durables and infrastructure growth, but valuation risks remain.

✅ Positive

• Strong ROCE (22.8%) and ROE (18.2%).
• Moderate debt-to-equity ratio (0.41).
• Increase in DII holdings (+1.95%).
• Well-diversified product portfolio and strong brand presence.

⚠️ Limitation

• High P/E ratio (84.7) compared to industry average.
• P/B ratio of 12.8 suggests expensive valuation relative to assets.
• Quarterly PAT decline (-17.4%).
• Stock trading at only 29% of its 52-week range, showing weak momentum.

📉 Company Negative News

• Decline in quarterly profits (69.9 Cr. vs 109 Cr.).
• Reduction in FII holdings (-0.16%).

📈 Company Positive News

• Strong EPS at ₹21.0.
• Increase in DII holdings (+1.95%).
• Healthy ROCE and ROE metrics despite profit decline.

🌐 Industry

• Consumer durables and cooling solutions sector driven by urbanization and infrastructure growth.
• Industry PE at 49.3 indicates moderate valuation compared to Blue Star’s premium.
• Sector outlook supported by rising demand for energy-efficient cooling solutions.

🔎 Conclusion

• Blue Star is financially strong with robust efficiency metrics but currently overvalued.
• Profit decline and high valuation suggest caution in near term.
• Accumulation recommended near ₹1,600–₹1,700 for favorable long-term exposure to consumer durables growth.