Blue Star Debt dropped on 19.6% in 2015 while Revenue increased on 8.4%

29-05-2015 • About Blue Star ($BLUESTARCO) • By InTwits

Blue Star reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is quite volatile: 5.5% in FY2015, 5.4% in FY2014, 3.1% in FY2013, -0.8% in FY2012, 8.7% in FY2011
Blue Star has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 2.2%.
CAPEX is quite volatile: 1,737 in FY2015, 3,947 in FY2014, 2,592 in FY2013, 7,167 in FY2012, 5,699 in FY2011
The company has highly profitable business model: ROIC is at 13.4%
It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 1.1x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Blue Star ($BLUESTARCO) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	29,510	27,888	28,970	29,343	31,819	8.4%
Gross Profit	6,641
EBITDA	2,561	-220	905	1,579	1,760	11.5%
Net Income	1,610	-1,051	391	775	542	-30.1%
Balance Sheet
Cash	464	489	143	661	419	-36.7%
Short Term Debt	4,445	3,670	4,216	4,944	3,739	-24.4%
Long Term Debt	0	0	0	0	239
Cash flow
Capex	541	536	276	399	602	50.6%
Ratios
Revenue growth	-22.7%	-5.5%	3.9%	1.3%	8.4%
EBITDA growth		-108.6%	-512.4%	74.4%	11.5%
Gross Margin	22.5%					0.0%
EBITDA Margin	8.7%	-0.8%	3.1%	5.4%	5.5%	0.1%
Net Income Margin	5.5%	-3.8%	1.3%	2.6%	1.7%	-0.9%
CAPEX, % of revenue	1.8%	1.9%	1.0%	1.4%	1.9%	0.5%
ROIC		-6.1%	6.9%	12.6%	13.4%	0.8%
ROE		-23.2%	9.8%	18.0%	11.8%	-6.2%
Net Debt/EBITDA	1.6x		4.5x	2.7x	2.0x	-0.7x

Revenue and profitability

The company's Revenue increased on 8.4% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 9.3 pp from 14.2% to 23.5% in FY2015.

Net Income marign decreased slightly on 0.94 pp from 2.6% to 1.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Blue Star's CAPEX/Revenue was 1.9% in FY2015. Blue Star's CAPEX/Revenue showed almost no change from FY2012 to FY2015. Average CAPEX/Revenue for the last three years was 1.4%.

Return on investment

The company operates at good ROIC (13.41%) while ROE is low (11.83%). ROIC increased slightly on 0.80 pp from 12.6% to 13.4% in FY2015. ROE decreased on 6.2 pp from 18.0% to 11.8% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.3x. Net Debt / EBITDA dropped on 0.7x from 2.7x to 2.0x in FY2015. Debt dropped on 19.6% in FY2015 while cash dropped on 36.7% in FY2015.

Appendix 1: Peers in Consumer Electronics

Below you can find Blue Star benchmarking vs. other companies in Consumer Electronics industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Hitachi Home And Life Solutions (India) ($HITACHIHOM)		4.5%	16.5%	18.3%	43.0%
Sharp India ($SHARP)		-25.1%	-7.4%	98.9%	22.2%
Whirlpool Of India ($WHIRLPOOL)		-1.7%	4.3%	2.2%	16.2%
Mirc Electronics ($MIRCELECTR)		-13.8%	-21.4%	-0.9%	-17.7%
Median (4 companies)		-7.7%	-1.5%	10.2%	19.2%
Blue Star ($BLUESTARCO)		-5.5%	3.9%	1.3%	8.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Whirlpool Of India ($WHIRLPOOL)	10.3%	8.9%	8.4%	7.9%	10.1%
Hitachi Home And Life Solutions (India) ($HITACHIHOM)	7.7%	4.3%	5.4%	5.6%	9.0%
Sharp India ($SHARP)	4.0%	7.2%	4.8%	6.3%	5.7%
Mirc Electronics ($MIRCELECTR)	4.0%	1.4%	-0.0%	0.5%	4.1%
Vxl Instruments ($VXLINSTR)					0.4%
Median (5 companies)	5.9%	5.8%	5.1%	5.9%	5.7%
Blue Star ($BLUESTARCO)	8.7%	-0.8%	3.1%	5.4%	5.5%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Hitachi Home And Life Solutions (India) ($HITACHIHOM)	5.1%	2.1%	12.0%	3.8%	4.2%
Whirlpool Of India ($WHIRLPOOL)	2.7%	4.5%	3.0%	3.0%	2.6%
Mirc Electronics ($MIRCELECTR)	0.8%	0.7%	1.3%	0.6%	0.0%
Median (3 companies)	3.4%	3.3%	3.0%	3.0%	2.6%
Blue Star ($BLUESTARCO)	1.8%	1.9%	1.0%	1.4%	1.9%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Whirlpool Of India ($WHIRLPOOL)	43.8%	34.9%	27.0%	21.1%	29.3%
Hitachi Home And Life Solutions (India) ($HITACHIHOM)	16.5%	6.5%	9.6%	8.4%	25.6%
Mirc Electronics ($MIRCELECTR)	9.3%	-0.0%	-4.0%	-2.2%	7.3%
Vxl Instruments ($VXLINSTR)	10.2%	13.7%	4.5%
Sharp India ($SHARP)	4.6%	7.9%	-4.1%
Median (5 companies)	10.2%	7.9%	0.2%	8.4%	25.6%
Blue Star ($BLUESTARCO)		-6.1%	6.9%	12.6%	13.4%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Mirc Electronics ($MIRCELECTR)	4.6x	5.8x		45.1x	4.9x
Hitachi Home And Life Solutions (India) ($HITACHIHOM)	1.5x	2.0x	1.4x	2.0x	1.0x
Sharp India ($SHARP)	0.8x	1.2x	0.4x	0.0x	0.6x
Vxl Instruments ($VXLINSTR)	5.0x	1.2x	3.9x		0.0x
Whirlpool Of India ($WHIRLPOOL)	-0.2x	-0.2x	-0.7x	-1.3x	-1.6x
Median (5 companies)	1.5x	1.6x	1.4x	1.0x	0.6x
Blue Star ($BLUESTARCO)	1.6x		4.5x	2.7x	2.0x

Blue Star stock price chart

Blue Star financials

mln.	FY2010	FY2011	FY2012

Revenue	38,195	29,510	27,888
EBITDA	0.000	2,561	-219.555
Net income	0.000	1,610	-1,051.030
CAPEX	0.000	541.5	535.8
Debt	0.000	4,445	3,670
Cash	0.000	464.3	488.9

About Blue Star

Blue Star Limited operates as an air conditioning and commercial refrigeration company in India. The company operates through Electro Mechanical Projects and Packaged Air-Conditioning Systems, Cooling Products, and Professional Electronics and Industrial Systems segments. The Electro Mechanical Projects and Packaged Air-Conditioning Systems segment designs, manufactures, installs, commissions, and maintains central air conditioning plants, packaged/ducted systems, and variable refrigerant flow systems; and provides contracting services in electrification, plumbing, and fire-fighting, as well as after-sales services in the areas of upgrades and enhancements, air management, water management, and energy management. It also offers electrical design and engineering services; and consultancy services for green building, as well as liasioning, approvals, commissioning, and asset management services. In addition, this segment supplies and installs entire power systems. The Cooling Products segment provides room air conditioners for residential and commercial applications; and manufactures and markets a range of commercial refrigeration products comprising water coolers, bottled water dispensers, deep freezers, cold storages, bottle coolers, ice cube machines, and supermarket refrigeration products for industrial, commercial, and hospitality sectors, as well as cold chain equipment. The Professional Electronics and Industrial Systems segment distributes professional electronic equipment and services, such as testing machines, medical, analytical, test and measuring, data communications, and industrial products and systems. This segment is also involved in the business of specialized industrial projects. The company also offers IT services. It serves institutional, industrial, and government organizations; and showrooms, restaurants, banks, hospitals, theatres, shopping malls, and boutiques. Blue Star Limited was founded in 1943 and is headquartered in Mumbai, India.