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Blue Star Faces the Heat in Q1
Mint Mumbai
|June 10, 2025
Blue Star Ltd's shares are down as much as 35% from their 52-week high of ₹2,417 in January as a weak summer season is expected to hurt room air-conditioner (RAC) demand and sales.
Despite significantly underperforming the Nifty 500 index so far in 2025, the stock's rally of about 125% in 2024 means valuations don't bring a lot of comfort. 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-basis points (bps) expansion in margin to 7.3%.
However, FY26 has begun 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 expected.
Blue Star told analysts recently that it expects about 25-30% year-on-year decline in volume in Q1 for the RAC industry on the high base of Q1 FY25's growth. Plus, elevated inventory remains a concern.
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