Blue Star (500067) Q3 25/26 earnings summary

Executive summary

• Q3 FY 2026 saw consolidated revenue growth of 4.2% year-over-year to INR 2,925 crore, with EBITDA up 5% and profit before tax down 2% due to a one-time labor code-related expense.

• Net profit declined to INR 80.5 crore from INR 132.5 crore, impacted by a one-time labor code-related expense of INR 56 crore.

• Cost control measures helped maintain margins, and the company modestly gained market share compared to peers.

• Management remains focused on a strong Q4 and anticipates improved performance in FY 2027, with leadership changes including the appointment of Mr. Mohit Sud as Executive Director of the UCP segment.

• Board approved unaudited financial results and key leadership appointments, including re-appointment of the Managing Director and new Independent Director.

Financial highlights

• Q3 FY 2026 consolidated revenue grew 4.2% year-over-year to INR 2,925 crore; EBITDA was INR 221 crore with a margin of 7.5%, flat year-over-year.

• Q3 profit before tax was INR 165 crore, slightly down from INR 167 crore last year; EPS for Q3 was INR 3.92.

• Net profit declined to INR 80.5 crore from INR 132.5 crore, impacted by a one-time labor code-related expense.

• Nine months FY26 revenue was INR 8,330 crore, up 5% year-over-year; net profit for nine months was INR 300.15 crore, down from INR 397.28 crore.

• Net borrowings rose to INR 352 crore from a net cash position of INR 102 crore a year ago.

Outlook and guidance

• Q4 FY 2026 expected to be strong for room air conditioners, commercial air conditioning, and refrigeration products.

• FY 2027 growth outlook for Electro-Mechanical Projects and Commercial Air Conditioning is 8%-10% CAGR, with room air conditioners projected at 18%-20% CAGR.

• Margin guidance for segment one (MEP) is 6.5%-7% and for segment two (unitary products) is 8.5% for Q4 and FY 2027.

• Price increases of around 10% are planned to offset input cost pressures and regulatory changes.

• Management continues to monitor regulatory changes, especially regarding new Labour Codes, and will adjust estimates as needed.