Articles by Sirali Gupta

Business

Blue Star newly rated 'Neutral' at Motilal Oswal; 9% upside seen

Motilal Oswal Financial Services has initiated coverage on Blue Star with a ‘Neutral’ rating and a target price of ₹1,950 per share, implying 9.2 per cent upside from Monday’s close of ₹1,784.75. The brokerage believes Blue Star’s profit will grow over the medium term, supported by market share gains in room air-conditioners (RAC), its leadership in commercial refrigeration and Commercial Air Conditioning (CAC), a gradual recovery in its Professional Electronics and Industrial Systems (PEIS) segment, and operating leverage from backward integration and scale.Steady market share gain in RAC segment Blue Star has been steadily gaining market share in the Indian RAC market, with its share rising to around 14 per cent in FY25 from about 7 per cent in FY14. The company is now targeting 15 per cent share by FY27E. In commercial refrigeration, Blue Star retains a strong leadership position, holding over 31 per cent share in deep freezers and modular cold rooms, according tto Motilal Oswal. Analysts estimate that revenue from the Unitary Cooling Products (UCP) segment could decline 3 per cent year-on-year (Y-o-Y) in FY26, largely due to a weak summer season. However, they expect a sharp rebound, projecting UCP revenue growth of 19 per cent and 18 per cent Y-o-Y in FY27 and FY28, respectively, driven by a recovery in demand. Earnings before interest and tax (EBIT) margins in UCP are expected to remain in the high single digits, with gradual improvement as Blue Star benefits from higher operating scale and increased indigenisation. CATCH STOCK MARKET LIVE UPDATES TODAYIntegrated MEP player pivots to high-value areas; CAC franchise strongBlue Star is a leading integrated MEP (Mechanical, Electrical and Plumbing) service provider, with around eight decades of experience across infrastructure, buildings and industrial projects. The company has been shifting its focus to higher-value, better-margin segments such as data centres, factories, and select infrastructure projects, which offer stronger profitability and cash flows. In its commercial air-conditioning (CAC) business, Blue Star offers a full range of energy-efficient solutions — including packaged units, ducted systems, VRF systems and chillers — catering to B2B clients. It holds: Leadership positions in ducted air conditioners and scroll chillers with 45–50 per cent market share, andSecond position in VRF and screw chillers, with around 20 per cent share.Analysts forecast a 15 per cent revenue compound annual growth rate (CAGR) over FY26–28 for the MEP and CAC businesses, supported by a healthy order book and segment Ebit margins of 8.6 per cent and 8.9 per cent in FY27 and FY28, respectively.PEIS segment: Recovery expected as capex and demand improveThe PEIS division contributed around 4 per cent of revenue and 8 per cent of Ebit over FY21–25. However, segment margins have compressed to ~9 per cent in FY25 from about 15 per cent in FY21. According to the analysts, the MedTech and data security verticals within PEIS were hit by regulatory and demand-related challenges, while the industrial solutions sub-segment is now gaining traction. A recovery in PEIS is expected to be driven by:Improving private capex, andRising demand in healthcare and data security.Analysts project a 10 per cent revenue CAGR over FY26–28 for PEIS, along with margin expansion to around 11–13 per cent.ValuationOn valuations, Blue Star currently trades at 48x FY27E EPS and 38x FY28E EPS, compared to its 10-year average of around 46x. Given the strong rerating in its valuation multiples in recent years, analysts view the stock as fairly valued at current levels. (Disclaimer: The views and investment tips expressed by Motilal Oswal Financial Services in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)

Business

UBS initiates 'Buy' on Shaily Engineering Plastics; sees 60% upside

Global brokerage UBS has initiated coverage on Shaily Engineering Plastics shares with a ‘Buy’ rating and a target price of ₹4,000 per share, implying 60.2 per cent upside from Monday’s close of ₹2,496.75. The brokerage believes the market is underestimating Shaily’s capabilities and multiple growth drivers across its business segments.Why is UBS bullish on Shaily Engineering Plastics?Multiple growth leversUBS expects higher traction and improved capacity utilisation in Shaily’s consumer and industrial segments, where it supplies components to global clients such as IKEA, GE Appliances and P&G. The brokerage also sees Shaily as a potential beneficiary of a favourable India–US trade deal and tariff reductions, which could enhance India’s competitiveness versus other emerging-market manufacturing destinations. In addition, Shaily is in the process of onboarding a large customer in the consumer electronics and semiconductor space, which UBS believes offers significant upside optionality beyond its base growth assumptions. CATCH STOCK MARKET UPDATES TODAY LIVEShaily set for big play in high-entry-barrier GLP-1 marketThe patent for GLP-1 drug semaglutide is set to expire in 2026 in key markets such as India, Canada and Brazil. These markets together could represent a total addressable market of 550–600 million devices, translating into ₹800–850 crore in revenue by 2030. Based on the scenario, analysts peg Earnings before interest, tax, depreciation and amortisation (Ebitda) to grow at 39 per cent compound annual growth rate (CAGR) in a low-case scenario; 52 per cent CAGR in the base case, and 59 per cent CAGR in a high-case scenario over FY25–30E. Shaily has partnered with 23–24 global pharma companies for generic GLP-1 devices, which could give it a 50–60 per cent market share across these three geographies, according to the brokerage. The segment has high entry barriers due to patented technology, a limited number of global competitors and complex regulatory requirements, which also make it hard for pharma companies to switch injector suppliers. Given this backdrop, UBS estimates the company’s healthcare segment revenue is to grow roughly 96 per cent CAGR between FY25 and FY28, with its contribution to overall revenue rising from 21 per cent to 55 per cent. ALSO READ | Neuland, Lupin, Divi's lead domestic, CDMO surge amid US generics headwindsConsumer and industrial segments set for steady growthShaily supplies a range of plastic and metal components to leading global brands such as IKEA, Gillette, P&G, GE Appliances and Schaeffler, catering to both domestic and export markets. The recent softness in these businesses has been driven largely by unfavourable tariff structures relative to other emerging-market manufacturing hubs that compete with India, according to UBS analysis. The brokerage reckons that any trade or tariff-related agreement that narrows this gap and offers more competitive duties versus peer countries would likely benefit both India’s manufacturing base and Shaily’s export prospects. Shaily’s consumer and industrial businesses are expected to deliver around 18 per cent revenue CAGR over FY25–28, supported by potential improvement in tariff positioning, and better utilisation of its currently underused capacity, which should help expand margins and improve return on capital employed (ROCE). The consumer electronics segment remains an additional optionality on top of this base growth. (Disclaimer: The views and investment tips expressed by UBS in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)