Blue Star stock soars to an all-time high of over 9% after a 66% increase in Q2 net earnings

Blue Star stock soars to an all-time high of over 9% after a 66% increase in Q2 net earnings

Blue Star's consumer durable stock had a solid start to Tuesday's trading session as investors reacted favorably to the company's Q2FY24 results. Monday after market hours saw the business announce its Q2FY24 results, which included a 19.5% increase in its consolidated revenue from operations to ₹1,890 crore. By contrast, the company's revenue for the same time in the previous year was ₹1,582 crore.

Over 55% of the company's total sales comes from its electro-mechanical projects & commercial air conditioning systems business, which had a 12.1% growth in revenue to ₹1,077 crore in Q2 FY24 from ₹961.22 crore in Q2 FY23.

While the commercial building sector continued to slow down and experience delays in order finalizations during the quarter, the Electro-Mechanical Projects business saw a buoyant level of inquiries and order finalizations from the factories, data centers, railway electrification, water MEP, metro railway, and healthcare sectors. According to the company's results report, the industrial, healthcare, and retail sectors continued to show interest in the commercial air conditioning market.

Furthermore, due to a slowdown in the data security business, revenue from the professional electronics and industrial systems segment fell by 9.4% to ₹83.70 crore in Q2 FY24 from ₹92.38 crore in Q2 FY23. In contrast, revenue from the company's unitary products segment increased by 38% to ₹729 crore in Q2 FY24 from ₹528.69 crore in Q2 FY23.

The company's results report states that better scale and stronger gross margins were the main drivers of the operating profit's considerable improvement to ₹122.69 crore (6.5% of revenue) for the quarter from ₹85.59 crore (5.4% of sales) in Q2FY23.

In terms of financial performance, the firm had a consolidated net profit of ₹70.77 crore in Q2FY24, a 66% increase over the net profit of ₹42.64 crore in Q2FY23. The consolidated net profit of the business for H1FY24 was ₹151.14 crore, a 31.75% increase over the net profit of ₹116.99 crore recorded in H1FY23.

As part of its ambitions for growth and profitability improvement, the firm keeps investing in digitization, speeding research and development, and increasing production capacity. As a result, as of September 30, 2023, the capital employed was ₹2069.62 crores, up from ₹1441.16 crores the previous year, according to the firm.

As of September 30, 2022, Blue Star had a net cash position of ₹285.85 crore, but as of the end of the quarter, its net borrowing was ₹392.62 crore.

The stock started today's session at ₹929, up 6.53%, after the company's strong Q2FY24 performance. It then continued to rise, hitting an all-time high of ₹955 apiece, up 9.51%. By 10:00 AM, the stock had gained 7.50% and was trading at ₹937.50. 

With a return of 52.46% this year, the company's shares have fared very well, marking the best annual performance since CY17.