Blue Star (500067) Q4 10/11 earnings summary

Executive summary

• FY11 total income rose 14% to Rs 2,892.91 crore, while PBITDA fell 8% to Rs 282.67 crore and PAT declined 27% to Rs 155 crore.

• Cost inflation, slower project execution and collections, higher borrowings and interest costs, and a higher effective tax rate weighed on earnings and cash generation.

• A three-year strategic plan targets stronger R&D, project execution, customer service, integration of acquired businesses, and expansion in residential and smaller-town markets.

Financial highlights

• Total income was Rs 2,892.91 crore versus Rs 2,544.04 crore in FY10; reported PBT was Rs 227 crore versus Rs 276.62 crore.

• Adjusted for exceptional items, PBT was Rs 226.57 crore, down 13.7%; PAT was Rs 155 crore, down 26.7%, versus Rs 211.49 crore.

• Financial expenses rose to Rs 24.39 crore from Rs 8.45 crore; tax provision increased to Rs 72 crore from Rs 65.13 crore despite lower PBT.

• Product exports grew 33% to Rs 130.8 crore; foreign-exchange inflow, including commission income, was Rs 160.3 crore.

• Standalone operating cash flow was reported at negative Rs 79.94 crore; carry-forward orders reached Rs 1,967.9 crore, up 16%.

Outlook and guidance

• FY12 outlook anticipated slower GDP growth, persistent inflation, rising interest rates, and slower cash flow; responses include cost control, faster collections, and tighter working-capital management.

• Short-term actions target lower costs, improved manpower productivity, faster cash collection, and more efficient working-capital management.

• The three-year plan prioritizes R&D and product development, technical and managerial skills, customer support, project execution, acquired-business integration, and penetration in residential and smaller-town markets.

• A new Himachal manufacturing plant was planned to become operational in FY12; Bharuch capacity expansion was also underway to support anticipated demand.