Blue Star shares fell 3.83% to ₹1,510.80 in afternoon trade on Friday following the company's disappointing Q1FY27 results that missed analyst expectations. The stock was trading 2.8% lower at ₹1,618.2 after the results announcement, with the cooling solutions manufacturer having lost 9% of its value so far this year. According to Moneycontrol, Motilal Oswal retained its 'Neutral' rating on Blue Star, flagging an "Earnings miss; lowest UCP margin in post-Covid period". The stock opened at ₹1,658.10 and touched an intraday high of ₹1,671.60 before settling at the current level. More than 1.5 million shares (three times the last 10-day average) changed hands on Friday, taking the cumulative wealth erosion to nearly ₹1,000 crore on the fourth straight day of decline.
Blue Star reported mixed results for Q1FY27, with consolidated net profit declining 15.26% year-on-year to ₹102.50 crore compared to ₹120.96 crore in Q1FY26. However, the company achieved revenue growth of 13.27% YoY to ₹3,377.92 crore, up from ₹2,982.25 crore in the corresponding quarter last year. According to reports from Essential Business Intelligence, the quarter also included a one-time gain of ₹9.2 crore, while tax expense declined to ₹32.1 crore from ₹42.4 crore a year earlier. As per Upstox Securities, the revenue figure is ₹3,377.92 crore with a growth rate of 13.27%. The profit before tax, excluding exceptional items, fell 23.7% to ₹125.42 crore from ₹163.23 crore in the corresponding quarter last year. The operating profit margin (OPM) compressed to 5.17% from 6.66% in the previous year, reflecting the impact of rising input costs and operational challenges.
At the operating level, Blue Star faced significant margin compression with EBITDA declining 12.5% YoY to ₹174.95 crore from ₹199.99 crore. The EBITDA margin contracted significantly to 5.2% from 6.7% in the corresponding quarter last year, indicating operational challenges despite revenue growth. As reported by Essential Business Intelligence, this margin compression suggests increased cost pressures or competitive pricing dynamics affecting the company's profitability metrics. According to CNBC TV18, EBITDA was well below the poll expectation of ₹247 crore, with the margin figure also missing analyst estimates of 7%. The company attributed the margin pressure to rising input costs and the delayed onset of the summer season, which impacted profitability during the quarter. Management revealed in a conference call that it wanted to raise prices by 13% at the start of April to offset the rising input costs, but has only managed a 5% price increase so far. Motilal Oswal noted that "Gross margin was down 1.7pp YoY at 21.7% (1.4pp below estimates)", with EBITDA declining 13% YoY to ₹1.8 billion (30% below estimates).
The Room AC and Commercial Refrigeration Business segment reported 12.7% revenue growth to ₹1,689.31 crore, but segment profit declined significantly to ₹49.69 crore from ₹87.47 crore a year ago. The company attributed this to delayed summer arrival and a short summer season that led to inventory pressure in the trade market. According to Moneycontrol Pro, Room AC margins fell sharply amid cost inflation, with the segment facing challenges from slow demand from commercial offices, factories and infrastructure segments due to higher costs and market uncertainty. Motilal Oswal highlighted that "UCP: Revenue was up 13% YoY (10% below estimate) to ₹16.9b, EBIT declined ~43% YoY to ₹497m, and EBIT margin contracted 2.9pp YoY to 2.9%" and "EMPS: Revenue rose 15% YoY to ₹16.3b, EBIT declined ~1% YoY to ₹1.1b, and PBIT margins contracted 1.1pp YoY to 6.8%".
Despite operational challenges, Blue Star maintained a robust financial position with carried-forward order book increasing 13.5% to ₹7,764.38 crore as of June 30, 2026, compared with ₹6,843.04 crore a year ago. The company reported stronger cash position with net cash rising to ₹900.25 crore as of June 30, 2026, from ₹370.92 crore in the same period last year. Chairman and Managing Director Vir S. Advani acknowledged the challenges, stating the company delivered modest revenue growth despite several challenges. He expects data centre MEP projects to support future growth, though commodity prices and exchange rates remain uncertain. The company will focus on balancing growth and margins, controlling costs and maintaining a strong balance sheet, while maintaining a cautious approach given market uncertainties in the HVAC&R industry. Motilal Oswal noted that "Strong project order inflows were led by data centers, while demand from commercial offices, factories and infrastructure remained subdued" and "CAC continued to see healthy bookings, supported by industrial, retail and healthcare demand".
