{"id":313,"date":"2019-09-30T10:36:35","date_gmt":"2019-09-30T10:36:35","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=313"},"modified":"2019-10-03T10:53:14","modified_gmt":"2019-10-03T10:53:14","slug":"blue-star-limited-bluestarco-will-use-the-extra-money-from-corporate-tax-cut-in-capital-expenses","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2019\/09\/30\/blue-star-limited-bluestarco-will-use-the-extra-money-from-corporate-tax-cut-in-capital-expenses\/","title":{"rendered":"Blue Star Limited (BLUESTARCO): Will use the extra money from corporate tax cut in capital expenses"},"content":{"rendered":"\n<p><strong>Update on the Indian Market:<\/strong><\/p>\n\n\n\n<p>On Friday, Market was more or less flat. Nifty closed 0.5% lower at Rs 11,512. Bharti Airtel (+2.89%), Bajaj Finance (+1.61%), ITC (1.36%) were among the biggest gainers. IndusInd bank (-4.92%), Yes bank (-5.0%), Vedanta (-5.69%) were the losers. Among the sectoral indices Pharma (-2.06%), Realty (-2.28%), Metal (-2.84) closed lower while there were no gainers.<br><\/p>\n\n\n\n<p>Excerpts from the interview by\nMr. B Thiagarajan, MD &#8211; Blue Star<\/p>\n\n\n\n<ul><li>Effective tax rate was 32% in FY19 and would\nhave been ~ 31% in FY20. So, setting aside certain concessions they will forego\nif they move to this regime, they should be gaining around 4.5 percent and 5\npercent in terms of EPS.<\/li><li>They will pump in this extra money into the\ncapital expenses. They have been on an indigenization mode and they will\naccelerate indigenization or reduce in-China dependency. <\/li><li>In FY20, they are looking at indigenizing deep\nfreezers. So ~ Rs 120 cr is being invested in Vada in Maharashtra. Sri City\nplant which they had acquired the land there, they would have looked at\nFY22-23, they may end up accelerating that because the room air conditioner\nmarket continues to be good.<\/li><li>Plastic injection moulding, compressor manufacturing\nindustry will benefit due to indigenization drive.<\/li><li>They will accelerate the capital investment\nthere. So the entire Sri City plant should get frozen sometime in\nJanuary-February 2020.<\/li><li>Unlike many other durables, air conditioners have\nbeen witnessing and even during Onam season they witnessed good growth. He\nthinks that will further grow.<\/li><li>The Onam season is an indication because there\nwere floods. He thought Onam season will be a washout, the markets are priced\nclose to around 40% growth over last year, but last year also there were\nfloods. The year before there was around 12% growth.<\/li><li>Going forward, the festival season should be ~\n12-15% growth. Having said that, the demand is for lower-end products and 40% of\nthe sales have been through consumer finance schemes.<\/li><li>According to him, there is no room for more\ndiscounts because the dollar has moved up. They have to keep a close watch on\nthe exchange rates because copper and quite a few components still get imported.<\/li><li>The competition is stiff and the reach is\nbecoming very complex; with 65% of the market for them are tier III, tier IV,\nand tier V. <\/li><li>To reach out, they have to pump up the\nadvertising expenses. So, there won\u2019t be price dilution. He expects that they\nwould maintain last year margin levels and marginally improve that.<\/li><\/ul>\n\n\n\n<p>Consensus Estimate (Source:\nmarket screener website)<\/p>\n\n\n\n<ul><li>The closing price of BLUESTARCO was \u20b9 794\/- as of 27-September-19.\nIt traded at 34x \/ 28x \/ 22x the consensus EPS for FY20E\/ FY21E\/ FY22E of \u20b9 23.1 \/ 28.3 \/ 36.1\nrespectively.<\/li><li>Consensus target price of \u20b9 792\/- implies a PE multiple\nof 22x on FY22E EPS of \u20b9 36.1\/-<\/li><\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update on the Indian Market: On Friday, Market was more or less flat. Nifty closed 0.5% lower at Rs 11,512. Bharti Airtel (+2.89%), Bajaj Finance (+1.61%), ITC (1.36%) were among the biggest gainers. IndusInd bank (-4.92%), Yes bank (-5.0%), Vedanta (-5.69%) were the losers. Among the sectoral indices Pharma (-2.06%), Realty (-2.28%), Metal (-2.84) closed [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[31,30],"tags":[21],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/313"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=313"}],"version-history":[{"count":2,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/313\/revisions"}],"predecessor-version":[{"id":315,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/313\/revisions\/315"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}