Blue Star shares fall after topline miss in Q4, margins shine

Shares of Blue Star

Ltd. are trading lower by 2% on Thursday, May 7, after the company reported a mixed March quarter performance, with revenue missing estimates but margins and profitability coming in ahead of expectations.

Consolidated revenue for Q4FY26 rose 1% YoY to ₹4,072 crore, below poll estimates of ₹4,276 crore. Both the Unitary Cooling Products (UCP) and Electro-Mechanical Projects & Packaged Air Conditioning Systems (EMPS) segments reported muted 1% revenue growth during the quarter.

EBITDA increased 18% YoY to ₹330 crore, well above estimates of ₹282 crore, while EBITDA margin expanded 120 basis points to 8.1%.

Profit after tax rose 8% YoY to ₹210 crore, also ahead of poll expectations of ₹173 crore.

A key highlight of the quarter was the UCP segment margin, which expanded 200 basis points YoY to 10.4%, its highest level since Q1FY20 and above estimates of 8%.

Gross margin, however, contracted sharply by 165 basis points to 21.5%, impacted by rising commodity prices. The company managed to offset some of the pressure through tighter cost controls, with employee costs and other expenses declining as a percentage of sales.

Among segments, the professional electronics business stood out, reporting 8% revenue growth and a sharp 490 basis point expansion in PBIT margin to 14.6%.

The EMPS segment saw margins decline 120 basis points to 6.4%, while UCP margins remained the strongest performer.

For FY26, revenue grew 4% YoY to ₹12,402 crore, while EBITDA rose 6% to ₹931 crore. EBITDA margin improved marginally to 7.5%. However, annual net profit declined 11% to ₹527 crore.

According to Equirus Securities, the UCP business benefited from strong summer-led demand and channel stocking across regions, while the EMP business continued to see demand from buildings, data centres, factories and government-led projects.

However, demand from office, education and IT sectors remained subdued.

The brokerage said that record UCP margins were driven by cost rationalisation measures and deferment of discretionary spending, calling the overall margin delivery another strong quarter for the company.

Blue Star shares settled 0.27% higher on Wednesday at ₹1,807.35. The stock has risen over 17% so far this year.