BLUE STAR LTD - BUY

Passing through tough business environment  during the life cycles of any company / business  is common.Some managements will learn new lesson from such experience ,take corrective measures and grow even faster.In some rare cases ,such down trends will help managements to open up new business opportunities through diversification or act as an eye opener to look beyond their conventional businesses. On the other hand some others will surrender their business even without a fight.We ,as investors, always interested only in the  first case.So let us look into BLUE STAR Ltd. Till few years back It was a star in Indian Air Conditioning Industry .Its main expertise was in Centralised Airconditioning and Commercial Refrigeration. In FY 2010-11 ,company posted a turnover of Rs 2888 Cr and a net profit of Rs.155 Cr .From there ,just after one year in FY 2012 company posted a loss of Rs.90 cr ! .Sharp slump in commercial real estate developments including the construction of shopping malls severely affected company’s performance during this period.Some communication gaps and lack of integration between the marketing and project execution wings of the company added fuel to the fire .The marketing wing accepted fixed rate orders without accurately assessing the possible increase in raw material cost which ultimately ends in a bleeding bottom line.Realising the seriousness of the situation management  accepted their fault and  has taken corrective actions which include concentrating in bottom line rather than increasing top line,strict measures to ensure profitability in a case to case basis,concentration in home air conditioning business to beat the slump in commercial segment ..etc.With all these efforts, company back to black in latest June quarter with a pre tax profit of Rs.13 Cr( excluding other income ). Actually , the business of air conditioning having good potential at a time of global warming,need of cold chains to preserve food and vegetables..etc.Blue star is India’s one of the largest air conditioning companies with vast marketing and service network and good brand value.I feel ,company will back to its past glory supported by  the initiatives taken by the management and it is the right time to enter in this stock with a long term view. From the peak of Rs.548 ( post FV split)  stock is now trading around Rs.192/-