Blue star ltd’s shares are down as much as 35% from their 52-wheek high of 2,417 in January as a weak summer season is expected to Hurt Room Air-Conditioner (RAC) Demand, and in Turn, Sales.
Despite the significant underperformance Vis-Vis the nifty 500 index so far in 2025, The stock’s sharp raly of about 125% in 2024 means valuations don’t Bring a lot of comoft. Blue Star’s Shares Still Trade at Almost 47 Times FY26 Estimated Earnings, as per bloomberg data, which is not particularly cheap.
The company ended fy25 with a 32% consolidated ebitda growth to 876 Crore, and A 45-Bas Points (BPS) Expantions in Margin to 7.3%. However, fy26 has been on a softer note, thanks to a milder summer season and the early arrival of the monsoon. This means the seasonally Strong June Quarter (Q1 of FY26) Now appears less exciting than initial expectations.
Blue Star Executives Told Analysts recently that they expect a 25-30% year-on -yar decline in volume during Q1 for the RAC Industry (And Blue Star) on the high base of Q1fy25’s Growth. Plus, Elevated Channel Inventory Remains A Concern.
“But management is still optimistic on fy26 full year rac growth of 10-15% banking on Stronger Festive Season (Second Summer), Pre-Buying in Q3 (Energy Label Change WeF January 2026) Underling Structural Demand for AC, “Iifl Securities said in a report.
On the other hand, the commercial refrigeration sub-segment could perform relatively better due to a favorite base and the limited impact of unseasonal rains. With Overall United Product Segment Revenue Poised to take a hit in Q1, Investors Should Watch Out For the Impact on the EBIT (Earnings Before Interest and Tax) Margin ever It plans to increase its focus on Controlling variable costs.
Total Revenue
Revenue from Blue Star’s Unitery Products Segment, Which Includes RACS and Commercial Refrigeration, was up 22% to 5,621 Crore in FY25, Contributing 47% of the company’s total revenue. The segment’s fy25 ebit margin rose 54 bps to 8.4%. Blue Star’s fy25 rac market share was close to 14% and it now aims to reach 15%.
Half of the company’s fy25 revionue came from from Electro-Mechanical Projects and Commercial Air-Conditioning Systems, Whoch Grew 27%. The electro-mechanical projects business business delivered a strong performance in fy25, aid by robust demand across across factories and data centers, While Demand Was MUTED in the Commercial Real Estate and Infrastructure Sector.
The Remaining Small Port of Blue Star’s Revenue Comes From Professional Electronics and Industrial Systems. Thus, Blue Star’s Total FY25 Revenue was up 23.5% to 11,968 Crore.
It should be noted that rival voltas ltd’s shares, too, have underperformed in 2025, declining by about 30%. In recent months, fy26 earnings estimates have larger been cut for bot companies, but analysts are generally not losing sleep over this.
Emkay Global Financial Services’ 15-Year Analysis Sugges Three Similar Periods of Weak Summers (2012-13, 2015, 2015, 2018), Where United Kooling Products (UCP) Revenue West Stockes Fell about 30-40%.
“Notable, Each Weak Summer was followed by a sharp rebound, with ucp review risk about 15-20% amid structural tailwinds like premiumization, low penetration, low penetration, and improoving Afffordability Driving Stockery Rallies of about 40-160% over the next 12-18 months, “Emkay’s analysts said in a report on 28 May.
Against this backdrop, from a Near-Term Perspective, Investors are Like for meaningful Clues on Demand Conditions from the Q1 Results and Management Commentaries Before Getting Anticipated rebound later on.
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