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Informist, Friday, Aug. 7, 2026

By Astha Oriel

NEW DELHI – Blue Star Ltd. expects high input costs that dragged down its June quarter bottom line to remain elevated but steady in Jul-Sept, a senior company official said Friday. The company, however, expects the market operating prices, albeit higher, to be slightly better in the current quarter vis-a-vis the June quarter owing to the liquidation of its old inventory. 

"I do not foresee in Q2 (September quarter) anything dramatically going to change in terms of the cost structure," an official told analysts and investors on a post-earnings conference call. "Input costs are going to be higher only. What I am expecting is the market operating prices should be better than what it is. It is not going to be dramatically different, but it will be better than what prevailed in Q1 (June quarter) because I am estimating that the old inventory that was there would have got liquidated."

The company could only pass on 5% of the higher input costs to its customers in Apr-Jun. "We entered the financial year with the hope that we will be able to pass on the commodity prices and other input costs increase to the consumers. The total impact that we wanted to pass on was around 13%. What we could pass on was only 5%," the official said.

Blue Star's current channel inventory levels are not alarming, but they have not normalised, as per the official. "See, the anticipation was the summer will continue beyond June 10th into July. That was the expectation. But June itself after 10th, it suddenly collapsed the demand. So, therefore, the channels carry some more inventory, but I don't think it is an alarming level at all. The key question to be asked is that when the channel will start buying the new inventory for the forthcoming festival season," the official said.

For the June quarter, the company managed to improve its net cash position due to the release of working capital. Its singular focus in the next six to nine months would be to improve the margin for the room air conditioners segment specifically, the official said. "We are certain that we will hold on to the market share. That's not the issue. The issue is we have to rejig the product portfolio. And even as the competition intensifies, how we will close the year with a margin of over 6.5%. Ideally, we would like to be 7% to 7.5%, which I do not have the view as of now. We have to wait for the war to end and how the exchange rate, how the commodity prices are going to move."

The company's order bookings during the quarter were strong for the electro-mechanical projects operations primarily driven by data centres. "While in the other market segments like commercial office, factories, infrastructure, order inflow remained sluggish as cost escalations due to West Asia crisis led to a deferment of order finalisation. Given the escalation of the input material cost, we continue to exercise caution in this business," the official said.  

For its commercial air conditioning operations, the growth prospects in terms of enquiries and order inflow appear reasonably good, as per the official. "However, escalating commodity prices and depreciating currency will continue to put pressure on margins in this (commercial air conditioning) business," the official said. 

Amongst segments, the company's sales in the commercial freezers business declined for the June quarter. "...the commercial refrigeration business witnessed degrowth during the current quarter as demand for deep freezers from ice cream OEMs (original equipment manufacturers) was muted. We expect the demand to pick up during the festive season," the official said. The company has, however, held on to the market share in the commercial fridge business in the June quarter, the official added.

For its data centre business, the company continued its leadership position in the data centre MEP (mechanical, electrical, and plumbing) projects segment under Blue Star's Electro-Mechanical Projects Group. "We have close to around INR 1,500 crores (INR 15 billion) of order inflow from this segment alone taking the pending order book or the carried forward order book as on 30th June 2026 to over INR 7,700 crores (INR 77 billion). And we expect the order inflow for the full financial year from data centre MEP projects to be around INR 3,000 crores (INR 30 billion). And in revenue terms, it should translate to close to around INR 1,400 crores (INR 14 billion)," the official said. 

The official said the data centre business is not a top line story alone, but it is also profitable. ".... the data centre segment is attractive for the simple reason these are eight to 12 months commissioning projects.... The second thing is the payment terms are very favourable. Third is there are enough price escalation provisions on the metal prices specifically and on electrical items," the official said. On an analyst's question related to exports, the official said the company is unable to export to the US amid tariff uncertainty.

Blue Star had reported consolidated net profit of INR 1.03 billion for the June quarter on revenues of INR 33.78 billion. At 1418 IST, shares of the company traded at INR 1,509.60 apiece on the National Stock Exchange, down nearly 4% from Thursday. End

Edited by Shubhayan Bhattacharya

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