HSBC maintains 'underweight' rating on Blue Star

HSBC InvestDirect has maintained its 'Underweight' rating on Blue Star with a target price of Rs 115.

Blue Star reported its Q4FY12 numbers, which were far below expectations.

Its electro-mechanical projects and packaged air-conditioning segment ( EMPPAC), which contributed 56.9% to the total revenues, surprised negatively with net sales de-growth of 20.2% and loss of Rs 576.2 million.

The company continues to report loss es in the EMPPAC and cooling segments and is showing signs of margin pressure. It has provided for cost overruns for 85% of old projects.

The amount of losses has been higher than that anticipated by the management, increasing the worries for the company.