Value investor- India mid & small caps

Bhaskar Chakraborty

Equity Bottom-Up

<ul><li>India’s second largest air conditioning (AC) player in a barely penetrated market offering a very long runway for growth.</li><li>Beneficiary of the high growth consumer AC industry. Company’s growth rate has far outstripped industry growth rate despite competition demonstrating the power of its brand.</li><li>Company has limited presence in North India that accounts for 40% of the market. Large room to improve distribution in north India and a wide portfolio of inverter ACs provides better growth outlook.</li><li>Business requires little capex to grow earnings. Impressive cash generation with 100% of EBITDA getting converted to operating cashflow (OCF) and 75% of OCF converting into free cashflow.</li><li>Low debt balance sheet, attractive dividend policy and healthy return ratios are additional sweeteners.</li><li>Consensus expects 37% EPS Cagr over FY16-19. At 10% discount to its comparable universe, Blue Star’s fair value is Rs780/share.</li></ul>

India’s second largest air conditioning (AC) player in a barely penetrated market offering a very long runway for growth.Beneficiary of the high growth consumer AC industry. Company’s growth rate has far outstripped industry growth rate despite competition demonstrating the power of its brand.Company has limited presence in North India that accounts for 40% of the market. Large room to improve distribution in north India and a wide portfolio of inverter ACs provides better growth outlook.Business requires little capex to grow earnings. Impressive cash generation with 100% of EBITDA getting converted to operating cashflow (OCF) and 75% of OCF converting into free cashflow.Low debt balance sheet, attractive dividend policy and healthy return ratios are additional sweeteners.Consensus expects 37% EPS Cagr over FY16-19. At 10% discount to its comparable universe, Blue Star’s fair value is Rs780/share.

Johnson Controls-Hitachi Air Conditioning India (JCHAC IN)

Johnson Controls-Hitachi Air Conditioning India

India Consumer Discretionary: Blue Star- Multi Year Opportunity

Blue Star Ltd

India Consumer Discretionary: Blue Star- Multi Year Opportunity