Blue Star Limited conducted its Q2 and H1 FY27 earnings conference call on October 30, 2026, with management including Mr. B. Thiagarajan (Managing Director) and Mr. Nikhil Sohoni (Group Chief Financial Officer).

Financial Performance

  • Consolidated revenue growth of approximately 21% year-over-year
  • Operating profit growth of approximately 10.5%
  • Net cash position of ₹289 crore as of September 30, 2026, compared to net borrowings of ₹417 crore as of September 30, 2025
  • Carried forward order book of ₹7,229 crore as of September 30, 2026, compared to ₹7,120 crore as of September 30, 2025, and ₹6,923 crore as of March 31, 2026

Segment-wise Performance

Segment 1 - Electromechanical Projects and Commercial Air Conditioning Systems:

  • Revenue grew 16.3% to ₹1,936 crore in Q2 FY27 vs ₹1,664 crore in Q2 FY26
  • Segment result was ₹133 crore (6.9% of revenue) vs ₹147 crore (8.8% of revenue) in Q2 FY26
  • Order inflows mainly from data centers, with good inquiry inflows from factories
  • Execution of few projects experienced delays affecting billing growth

Segment 2 - Unitary Products:

  • Revenue grew 29.4% to ₹898 crore in Q2 FY27 vs ₹694 crore in Q2 FY26
  • Segment result was ₹21 crore (2.3% of revenue) vs ₹43 crore (6.2% of revenue) in Q2 FY26
  • Room AC business showed strong demand due to extended summer and delayed monsoon
  • Commercial refrigeration business showing signs of revival

Segment 3 - Professional Electronics and Industrial Systems:

  • Revenue grew 51% to ₹97 crore in Q2 FY27 vs ₹64 crore in Q2 FY26
  • Segment result was ₹23 crore (23.7% of revenue) vs ₹6.2 crore (9.6% of revenue) in Q2 FY26
  • Company sold its MedTech business for total consideration of ₹35.6 crore on August 31, 2026
  • Warranty provisions for MedTech business written back, improving profitability

Key Business Updates

Room Air Conditioners:

  • Industry growth estimated at 30% in value terms for H1 FY27
  • Blue Star growth around 28-29% in H1 FY27
  • Q2 standalone industry growth estimated at 35-40%, Blue Star at 42%
  • Company lost market share in April but regained it from May through September
  • Target margin of 6.5% for the segment in FY27

Commercial Refrigeration:

  • Showing signs of revival, expected to grow from Q3 onwards
  • Required price increase of 24-25% due to material cost escalation
  • Expected single-digit growth for the year

Electromechanical Projects:

  • Data center segment driving growth with expected order booking of ₹4,000 crore in FY27
  • Revenue from data center projects expected to grow from ₹2,000 crore to ₹4,000 crore over 3 years
  • Company defocusing from infrastructure segment due to margin pressures

International Business:

  • Heat pump solutions gaining acceptance in US market
  • Potential for USD 100 million additional revenue from US market

Cost and Margin Pressures

  • Raw material costs increased approximately 18% from January to October 2026
  • Only partial cost pass-through achieved so far
  • October price increase implemented but still leaves 5% gap
  • Company embarking on product portfolio rejig with differentiated and cost-optimized SKUs
  • Outsourcing of entry-level products may increase from current 15% to 30%

Business Outlook and Guidance

  • Expect room AC revenue growth of 25% for FY27
  • Target 6.5% margin for unitary products segment
  • Capex guidance of ₹300 crore for FY27, including R&D and digital expenditure
  • Concerns about monsoon shortfall affecting Tier 3-5 town demand
  • Interest rate hikes potentially impacting consumer finance and demand