Blue Star (500067) Q4 99/00 earnings summary

Executive summary

• FY00 was a transition year: operations were refocused on airconditioning, refrigeration, professional electronics and industrial equipment; software was demerged after year-end and industrial projects were phased out.

• Total income was virtually flat, while reported PAT rose 43%; higher gross margins in non-software businesses drove the improvement.

Financial highlights

• FY00 total income was Rs.480.95 crore vs Rs.476.49 crore; PBT was Rs.25.20 crore vs Rs.18.12 crore, and PAT was Rs.23.24 crore vs Rs.16.27 crore.

• EPS rose to Rs.8.58 from Rs.6.00; figures include the International Software Division (ISD), which contributed 8% of total revenue.

• Gross margin reached 28.6%, up more than 2.8 percentage points; non-software gross margin improved from 23.4% to 26.1%.

• ISD contributed Rs.37.14 crore in operating income and Rs.8.10 crore in PBT; software generated 35% of consolidated PAT.

Outlook and guidance

• Further profit improvement was expected as low- or negative-margin industrial project contracts were completed and their drag on margins receded.

• The Dadra Plant tax holiday was expected to provide an effective tax shield in FY01.

• Central airconditioning order booking reached Rs.151 crore vs Rs.139 crore; growth opportunities included software, power, healthcare and pharmaceutical customers.

• Cold-room growth opportunities were identified in ice cream, horticulture, fast food, restaurants and healthcare markets.