BLUESTARCO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.3
| Stock Code | BLUESTARCO | Market Cap | 38,749 Cr. | Current Price | 1,883 ₹ | High / Low | 2,270 ₹ |
| Stock P/E | 94.0 | Book Value | 139 ₹ | Dividend Yield | 0.48 % | ROCE | 22.8 % |
| ROE | 18.2 % | Face Value | 2.00 ₹ | DMA 50 | 1,788 ₹ | DMA 200 | 1,810 ₹ |
| Chg in FII Hold | -1.39 % | Chg in DII Hold | 1.44 % | PAT Qtr | 76.4 Cr. | PAT Prev Qtr | 69.9 Cr. |
| RSI | 62.8 | MACD | 10.2 | Volume | 9,69,023 | Avg Vol 1Wk | 7,14,427 |
| Low price | 1,521 ₹ | High price | 2,270 ₹ | PEG Ratio | 1.65 | Debt to equity | 0.41 |
| 52w Index | 48.3 % | Qtr Profit Var | -21.1 % | EPS | 18.4 ₹ | Industry PE | 49.8 |
🔍 Analysis: Blue Star Company shows strong efficiency metrics with ROCE at 22.8% and ROE at 18.2%, supported by EPS of 18.4 ₹. Debt-to-equity at 0.41 is manageable, and dividend yield at 0.48% adds minor stability. However, the stock trades at a very high P/E of 94 compared to the industry average of 49.8, indicating stretched valuations. PEG ratio of 1.65 suggests overvaluation relative to growth. Quarterly PAT declined (-21.1%), raising concerns about earnings consistency. Current price (1,883 ₹) is above DMA supports (50 DMA at 1,788 ₹, 200 DMA at 1,810 ₹), showing near-term strength but limited upside compared to its 52-week high (2,270 ₹). RSI at 62.8 indicates the stock is approaching overbought territory.
💡 Entry Zone: Ideal entry would be in the 1,650–1,750 ₹ range, aligning with valuation comfort and DMA supports. Deeper accumulation possible near 1,520 ₹ (52-week low) for margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain position for 2–3 years given strong ROE/ROCE. Consider partial exit near 2,200–2,250 ₹ resistance if valuations stretch further without earnings support. Long-term investors should monitor profit consistency and PEG ratio alignment for sustained compounding.
🌟 Positive
- Strong ROCE (22.8%) and ROE (18.2%)
- EPS at 18.4 ₹ supports earnings strength
- Debt-to-equity at 0.41, manageable leverage
- DII holdings increased (+1.44%)
- Stock trading above DMA supports, showing trend strength
⚠️ Limitation
- High P/E (94 vs industry 49.8)
- PEG ratio (1.65) signals overvaluation
- Dividend yield modest (0.48%)
- Quarterly PAT decline (-21.1%)
📉 Company Negative News
- Profit decline in recent quarter
- FII holdings reduced (-1.39%)
📈 Company Positive News
- Strong efficiency metrics (ROE, ROCE)
- DII stake increased (+1.44%)
- EPS performance supports valuation comfort
🏭 Industry
- Industry PE at 49.8, much lower than Blue Star’s valuation
- Consumer durables and cooling solutions sector benefits from rising demand in infrastructure and residential markets
✅ Conclusion
Blue Star is a moderate candidate for long-term investment. Strong ROE and ROCE support fundamentals, but high P/E and profit decline limit rating. Ideal entry is near 1,650–1,750 ₹ for margin of safety. Existing holders should maintain for 2–3 years, with partial exit near 2,200–2,250 ₹ resistance if valuations outpace earnings growth.