Blue Star

Blue Star reported a softer Q1 FY26 with revenue growing 4.1% to ₹2,982 crores, but net profit de-grew to ₹120.82 crores from ₹168.76 crores in Q1 FY25. EBITDA margin contracted to 6.7% from 8.3% in the prior year, primarily due to unseasonal rains impacting the Room Air Conditioning segment. Despite this, the company's B2B segments showed robust growth and the overall carried-forward order book reached ₹6,843 crores, a 12.5% increase year-on-year.

The summer season was 'disappointing' due to unseasonal rains, leading to a 13.3% de-growth in the Unitary Products segment revenue to ₹1,499.4 crores. However, management estimates a slight market share improvement to above 14% and remains confident in the long-term CAGR of 19% for the next five years. They anticipate a demand revival during the festive season, with the industry expected to grow 10-15% for the full year, partly driven by pre-buying ahead of new energy label norms effective January 1st.

The Electro-Mechanical Projects and Commercial Air Conditioning Systems (Segment-I) demonstrated strong performance, with revenue growing 35.9% to ₹1,412.5 crores. The order book for this segment alone stood at ₹5,080 crores as of June 30, 2025, up from ₹4,557 crores last year. Key demand drivers included manufacturing, data center, and healthcare segments, with the company aiming for 15% growth and 7-7.5% margin for this segment for the full year.

Management clarified that inventory is 'not an issue at all,' with only about 30 days of excess inventory, which is expected to clear. They stated that Blue Star has marginally outperformed the industry in the Room AC segment, with market share improving to around 14.2%. This gain is attributed to a comprehensive strategy including products at every price point and expanded distribution in Tier 3, 4, 5 cities, particularly in regions where market share was historically lower.

The Unitary Products segment (Segment-II) saw a revenue de-growth of 13.3% and a margin contraction to 5.8% due to lower volumes and operating leverage impact. The Professional Electronics and Industrial Systems segment (Segment-III) also de-grew by 27.3% to ₹70.4 crores, primarily due to challenges in Med Tech and Data Security, though its margin improved to 10.8% due to a favorable product and service mix. Commercial Refrigeration, a part of Segment-II, witnessed strong growth driven by processed food and pharmaceutical segments.

The company continues to invest in manufacturing capacity, research and development (R&D), and digitalization, with R&D spending around 1.5% of revenue. As of June 30, 2025, the company maintained a net cash position of ₹370.9 crores, down from ₹1,042.9 crores a year ago, reflecting ongoing investments. Management emphasized a commitment to strategic investments for long-term growth and innovation while ensuring sustainable value creation.