Blue Star Limited reported a robust 21% consolidated revenue growth for the second quarter of FY27, driven primarily by strong demand in the room air conditioner segment due to an extended summer and festival stocking. The company also saw an operating profit growth of around 10.5%. Management discussed margin pressures, strategic initiatives for product portfolio rejigging, and an optimistic outlook for the second half of the fiscal year, focusing on improvements in the unitary cooling products segment.
Blue Star Limited has announced its financial results for the second quarter and half-year ended September 30, 2026. The company reported a significant 21% consolidated revenue growth for Q2 FY27, accompanied by a approximately 10.5% increase in operating profit. This growth was largely attributed to a strong performance across segments, with the room air conditioner (RAC) business showing exceptional strength driven by an extended summer season and early festival season stocking.
Key Financial Highlights and Segment Performance
During the earnings call, Mr. B. Thiagarajan, Managing Director, highlighted that while margins remain under pressure, Q2 represented a period of consolidation. The company is focused on initiatives to regain margin levels, particularly in unitary cooling products, with a target to reach at least 6.5%. The RAC industry saw growth between 35% to 40% in Q2 standalone, with Blue Star achieving around 42% primary growth.
The commercial air conditioning (CAC) business also recorded strong revenue growth, supported by demand from healthcare, education, and industrial segments. On the international front, heat pump solutions in the U.S. market are seeing growing acceptance. However, segment results for CAC were impacted by material cost escalations. Unitary Products (Segment 2) revenue grew by 29.4%, though margins continued to be under pressure due to material cost escalations that could not be fully passed on. The commercial refrigeration business is showing signs of revival. The Professional Electronics and Industrial Systems segment saw a significant revenue growth of 51%, boosted by the sale of its MedTech business.
Outlook and Strategic Initiatives
Looking ahead, Blue Star anticipates robust demand for room ACs during the festival season and expects further orders for data center MEP projects. The company is optimistic about revenue growth momentum in H2 FY27 and will focus on improving margins through price revisions and product cost optimizations. Key strategic initiatives include rejigging the product portfolio, optimizing costs, and focusing on high-margin segments like data centers and factories within the electromechanical projects business. The company also expects the electromechanical projects business to grow substantially, with data centers being a primary driver. The overall construction contract business revenue is projected to grow, with a focus shifting from infrastructure to data centers and factories.
Margin Management and Future Prospects
The company is actively working on initiatives to improve margins in its Unitary Products segment, including product portfolio rejigging and value engineering. Management acknowledged the challenge of passing on price increases and managing raw material cost escalations. The guidance for the full year remains at achieving at least 6.5% margin. There’s an expectation of around 20% to 25% volume growth in the second half of FY27, with potential for higher growth if the summer season begins earlier. The company is also exploring opportunities in advanced liquid cooling and continues to manage its business for profitability and free cash flows.
Source: BSE
