Blue Star Surges Over 14% Hit 52-week High After Launching ₹1,000 Crore QIP

Shares of Blue Star, the prominent consumer durables company, witnessed an impressive 14% surge in their opening price today, reaching 52-week high of ₹909. This significant upturn comes as the company announced a qualified institutional placement (QIP) issue aimed at raising funds to fuel its growth aspirations.

QIP Floor Price Set at ₹784.55 per Share

The QIP floor price has been set at ₹784.55 per share, representing a modest 2% discount to the closing price of ₹800.05 on the previous trading day. It's noteworthy that the company retains the discretion to offer a discount of up to 5% on the floor price. The executive management committee of Blue Star will convene on September 22 to determine the final issue price.

Fundraising to Support Growth and Debt Reduction

The board of Blue Star had previously greenlit a proposal to raise up to ₹1,000 crore through QIPs or other suitable methods across one or more tranches, as indicated during the April-June quarterly results. The funds are earmarked to support the company's ambitious growth plans, with a portion also designated for reducing the company's outstanding debt.

Vir Advani, Vice Chairman and Managing Director of Blue Star elaborated on the intended use of funds, stating, "As we raise this money, part of it will go to retire some of this debt, and more of it will go into investment in our Sri City plan, We've completed phase one, phase two will be ready by March 2024, and we're also planning a phase three. This fundraising will help us pay off debt and invest in our growth.”

Strong Financial Performance and Expanding Order Book

Blue Star is on track to achieve its goal of double-digit growth in the fiscal year 2024, as previously mentioned by Vir Advani. In the past month alone, Blue Star's shares have surged over 14%, and they continue to demonstrate resilience, with a year-to-date increase of 52% and 66% rise over the past year. The company's market capitalization now stands at an impressive ₹17,365.39 crore.

In the first quarter ended June, Blue Star reported a robust 12.13% increase in consolidated net profit, reaching ₹83.37 crore, compared to ₹74.35 crore in the corresponding quarter of the previous fiscal year. The company's revenue from operations also showed impressive growth, rising by 12.6% in Q1 to reach ₹2,226 crore, compared to ₹1,977.03 crore in the same period last year.

Blue Star's carried-forward order book as of June 30, 2023, surged by an impressive 37.4% to ₹5,359.05 crore, compared to ₹3,901.48 crore as of June 30, 2022. The order book as of March 31, 2023, stood at ₹5,042.27 crore.

Despite fewer-than-anticipated orders from the commercial buildings sector, the company reported healthy bookings from the factories and data center sectors, driven by the government's continued emphasis on manufacturing investments. Additionally, Blue Star saw an uptick in inquiries from the healthcare and hospitality sectors, while the railway electrification and metro railway sectors also contributed to the company's buoyant quarter.

Strong International Business Prospects

Blue Star reported robust international business prospects, particularly in the Middle East markets, which continue to remain upbeat. The region has witnessed substantial investments driven by significant growth plans and government policies, leading to strong demand for Blue Star's B2B products across territories.