Motilal Oswal highlights Blue Star’s strong positioning in the Indian air-conditioning and refrigeration market, noting its steady rise in room air conditioner market share to ~14% in FY25 from ~7% in FY14, with a target of 15% by FY27. The company also retains leadership in commercial refrigeration with over 31% share in deep freezers and modular cold rooms, and dominance in ducted ACs and scroll chillers (45–50% share).
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Motilal Oswal Report
Blue Star Ltd. is among the top performers in the consumer durables space, outperforming Havells India, Voltas, and the BSE Sensex by 181%, 127%, and 161%, respectively, over the last three years.
This was fueled by market share gains and margin expansion in the unitary cooling product segment, along with strong growth in the mechanical, electrical, and plumbing business.
Blue Star trades at 48x/38x FY27/28E EPS (vs an average of 46 times in the last 10 years), and we believe that the stock is fairly valued at the current levels given the strong rerating in its valuation multiples seen in the last few years.
We initiate coverage on the stock with a Neutral rating and an SoTP-based target price of Rs 1,950 (valued at 50x Dec’27E EPS for UCP, 40x Dec’27E EPS for MEP and central air conditioning, and 25x Dec’27E EPS for PEIS).
Key risks:
climate-driven disruption;
import dependency; and
intensifying competition.
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