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Margins pressurize Blue Star's net - Views on News from Equitymaster
Blue Star Limited has posted a 8.4% growth in sales from Rs 986 m in 1QFY00 to Rs 1068 m in 1QFY01. The operating profit margins have however, dipped from 7.9% to 6.8%. This is because the air conditioner market is becoming highly competitive, especially after the entry of the Korean multinationals like LG and Samsung, as the realisations have come under enormous pressure.
(Rs m)
1QFY00
1QFY01
Change
Sales
986
1,068
8.4%
Other Income
0.3
17.4
Expenditure
908
996
9.6%
Operating Profit (EBDIT)
78
73
-6.4%
Operating Profit Margin (%)
7.9%
6.8%
Interest
19
21
6.8%
Depreciation
22
26
22.3%
Profit before Tax
37
43
16.1%
Other Adjustments
8
7
-17.5%
Tax
3
5
66.7%
Profit after Tax/(Loss)
26
32
20.5%
Net profit margin (%)
2.7%
2.3%
No. of Shares (eoy) (m)
27.1
20.3
Diluted number of shares
20.3
20.3
Diluted Earnings per share*
5.2
6.2
*(annualised)
Excluding the demerged International Software Division (ISD), the sales for the current year is up 19%, from Rs 900 m in 1QFY00 to Rs 1068 m in 1QFY01. The other adjustments here include charges on account of the voluntary retirement scheme.
The scheme of arrangement between the company and Blue Star Infotech Ltd.. For the demerger of the International Software Division (ISD) has been implemented. Consequently the paid-up capital of the company stands reduced from Rs 270.9 m to Rs 203.2 m.
The stock is currently trading at Rs 36.5 at a P/E multiple of 5.8x on the annualised first quarter 1QFY01 earnings.
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