"Reaching for the Stars: Upgrading Blue Star to a 'Buy' Rating"

 

Twinkle twinkle little star, how I wonder what you are - the famous nursery rhyme rings true when looking at the enigmatic Blue Star Corporation. This relatively obscure company has been overlooked by investors dazzled by glitzy tech stocks and high flyers of the moment. As fundamentals take focus again, Blue Star deserves attention.

 

Shining brightly in our proprietary stock screening model, Blue Star's valuation ratios stand out as a rare underpriced gem compared to industry peers - presenting a compelling risk/reward profile. Long laboring in the shadows of Wall Street coverage, the company's profitability and intrinsic value merits are ready for the spotlight.

 

We are upgrading Blue Star to a "Buy" rating - moving away from the negative outlook of other analysts. While past performance shows mixed results, our rating reflects the discounted upside for patient investors in light of underlying quality assets, improving returns on capital and a pristine balance sheet. There may be some near-term volatility, but we see Blue Star's trajectory pointing higher over a 12-month timeframe as prices reconnect with fair value.

 

Blue Star’s last 5 years stock price

 

●      Blue Star's stock price underwent significant fluctuations from 2019 to 2024.

●      While the exact highs and lows depend on the data source, the general trend shows:

○      A relatively stable period with gradual growth from 2019 to early 2021.

○      A sharp peak and subsequent correction in mid-2021, potentially driven by market sentiment or specific company news.

○      A modest growth trend in the second half of 2023.

●      Approximate Closing Prices:

○      January 1, 2019: 654.15 INR

○      January 1, 2020: 750.40 INR

○      January 1, 2021: 954.10 INR

○      January 1, 2022: 752.05 INR

○      January 1, 2023: 885.65 INR

○      January 1, 2024: 1042.00 INR

Key Observations:

●      The stock price experienced a 59% increase from January 1, 2019, to January 1, 2024, suggesting overall growth.

●      However, the price trajectory was not linear, with periods of significant gains and corrections.

●      Blue Star's stock price appears to have been more volatile than the broader Indian stock market during this period.

●       

Factors Influencing Performance:

●      Marketwide events: Broader market movements, such as economic fluctuations or investor sentiment, likely played a role in the overall trend.

●      Company-specific factors: News announcements, financial performance, product launches, or industry developments could have also influenced Blue Star's stock price.

Key insights:

●      Blue Star's stock price demonstrated volatility throughout the five-year period, suggesting it might be a riskier investment compared to companies with steadier performance.

●      However, the recent growth trend shows promising signs, potentially indicating investor confidence in the company's future.

 

Blue Star Ltd.: Analyst Sentiment and Key Metrics

This data snapshot provides a quick overview of analyst sentiment and key financial metrics for Blue Star Ltd. Here's a breakdown of each element:

Consensus Rating:

The consensus rating is 3.96 out of 5. This is the average of ratings provided by covering analysts and indicates an overall positive/bullish view on the stock as rating is close to 4 or "Buy" range.

 

Buy/Hold/Sell Distribution:

●      65.2% of analysts (15 out of 23) rate Blue Star stock as a "Buy". This shows a strong majority having a positive view.

●      26.1% recommend holding the stock (6 out of 23 analysts).

●      Only 8.7% or 2 analysts have a negative view and rate it as a "Sell".

12M Target Price:

The average 12 month target price across estimates from 18 out of 25 analysts is 989.06 INR. This implies the analysts are forecasting 4.8% upside from current levels over next year.

 

Last Price:

The latest market price reported is 944 INR per share.

 

Pricing Currency:

The currency denominating all price and target figures is Indian Rupees (INR).

 

Return Potential:

At 12M target of 989.06 INR vs prevailing rate of 944 INR, the implied return works out to 4.8%. Indicates analysts expect modest upside.

 

LTM Return:

The stock has delivered 58.2% return over last 12 months, significantly outperforming over the period.

 

Evaluating Blue Star's Credit Risk: Insights from CRISIL and CARE

1. Short Term CRISIL A1+: This suggests Crisil has assigned a strong short-term credit rating of A1+ to Blue Star.
2. Outlook CARE Stable: This indicates CARE Ratings maintains a stable outlook for Blue Star, meaning they don't expect the company's creditworthiness to change significantly in the near future.
3. Long Term AA+: This shows Crisil has assigned a high long-term credit rating of AA+ to Blue Star.
4. Short Term A1+: This repeats the A1+ short-term rating from Crisil.

Interpretation:

●      Overall Positive Creditworthiness: Both Crisil and CARE assign strong credit ratings to Blue Star, indicating a low risk of default on its financial obligations.

●      Stable Outlook: CARE's stable outlook suggests they are confident in Blue Star's ability to maintain its current creditworthiness.

●      Strong Short-Term and Long-Term Ratings: High ratings in both short-term and long-term categories imply Blue Star has a robust financial position and can manage its debt effectively.