BLUE STAR

The central air conditioning major, Blue Star, is a key beneficiary of the economic boom in the country across sectors like IT/ITES, retail and telecom. 

This is reflected in the strong CAGR of 32 per cent and 40 per cent in sales and operating profit respectively in the past three years. 

Notably, such strong growth traction is expected to continue as the company is sitting on a strong order book position, which is at Rs 1,030 crore as on September 2007. It is likely to get repeat orders from its existing customers as they expand operations. 

It is expanding its capacities by investing about Rs 60-70 crore, which will lead to economies of scale and rationalisation of costs leading to margin expansion. Its return on equity and return on capital employed, which were at 34 per cent and 26 per cent respectively in FY07, will only improve. 

However, the full benefits will be reflected only from the next financial year. The macro factors too continue to be robust, with huge investments planned in all the above mentioned sectors.