Synopsis:
Blue Star jumped sharply after hitting its low after it posted its performance for the first quarter of this financial year.
The shares of this leading AC manufacturer are back in focus as it reported a sluggish demand in AC sales affected mainly due to unseasonal rains. Additionally, the management commentary has increased the future uncertainty of its performance.
With a market capitalization of 36,323 crore, the shares of Blue Star Ltd are currently trading at Rs 1,767 per share, representing a 27 percent decline from its 52-week high of Rs 2,419.95 per share. Over the past five years, the stock has delivered a robust return of 625 percent.
Q1 Highlights
Blue Star reported a flatish growth of 4 percent in its revenue that reached Rs 2,982 crore in Q1 FY26 from Rs 2,865 crore in Q1 FY25. However, the company reported a decline of 26 percent from its last quarter revenue of Rs 4,019 crore.
Coming to its profitability, it reported a net profit decline of 28 percent to Rs 121 crore in Q1 FY26 as compared to Rs 169 crore in Q1 FY25. Additionally, it declined by 38 percent from its last quarter profit of Rs 194 crore.
However, the management said that the weak sales are mainly attributable to the weak demand in summer because of the unseasonal rains, which impacted the Air Conditioner sales of the company, from which it derives the majority revenue, and it expects the demand to rise in the upcoming festive season.
Also Read: 4 Stocks in which promoters increased their stake this week to keep an eye on
Segment Highlights
1. Electro-Mechanical Projects & Commercial Air Conditioning Segment
Revenue saw a significant jump of 35.9 percent year-over-year, reaching Rs 1,412.46 crore in Q1 FY26, thanks to strong order inflows from factories, data centers, and the healthcare sector.
However, the segment margin took a hit, dropping to 7.9 percent from 9.9 percent last year. While demand in the railway and metro infrastructure sectors remained low, the Commercial Air Conditioning business experienced impressive growth, particularly in ducted systems, VRF, and chillers, driven by increasing demand from the manufacturing and education sectors.
2. Unitary Products Segment
This segment experienced a 13.3 percent year-over-year drop in revenue, totaling Rs 1,499.37 crore. The decline was primarily due to a sluggish summer season and an early monsoon that affected the demand for Room ACs. Additionally, the segment’s margin decreased from 9.1 percent to 5.8 percent.
On a positive note, the company managed to slightly increase its market share by expanding its distribution network and maintaining a robust product lineup. In contrast, the Commercial Refrigeration sector saw impressive growth, fueled by rising demand from the processed food and pharmaceutical industries, signaling a rebound from the regulatory challenges faced last year.
3. professional Electronics & Industrial Systems Segment
Revenue took a hit, dropping by 27.3 percent year-over-year to Rs 70.42 crore in Q1 FY26, largely due to some hurdles in the Med Tech and Data Security sectors. On a brighter note, the segment margin saw a slight uptick, rising to 10.8 percent from 9.9 percent, thanks to a solid performance in Industrial Solutions, which enjoyed a boost from growing demand in the manufacturing and testing industries. However, the ongoing regulatory uncertainty surrounding the import of used medical devices continues to cast a shadow over the Med Tech sector’s performance.
Guidance and Others
Blue Star management has significantly slashed its revenue growth guidance for the financial year 2026 from 20 percent to 10 percent. Additionally, it also lowered its EBITDA margin guidance to be in the range of 8.5 percent.
Blue Star Ltd. is an Indian company that makes and sells air conditioners and refrigerators. It also takes up big cooling projects and offers installation and repair services. The company deals in testing and medical equipment too. Its products are sold in India and exported to other countries like those in the Middle East and Asia.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
