Blue Star Eyes 15% CAGR Top-Line Growth Over FY 26-28 On Strong Demand

Blue Star Ltd. is targeting a topline growth at 15% CAGR in the next two financial years between FY26 and FY28. The company relies on positive consumer sentiment and higher demand for air conditioners and refrigerators to achieve its target, according to its Chairman and Managing Director, Vir S Advani.

In a conversation with NDTV Profit on Thursday, Advani expressed confidence over achieving the target between FY26 and FY28.

"I think so. I think that's doable," he said, responding to a question whether it's reasonable to expect 15% CAGR (compound annual growth rate) in topline growth over FY26–FY28.

“We would like to do more. We have ambitious plans internally, which may be higher than that. But I think as an investor, looking at Blue Star's 15% CAGR is very reasonable,” the CMD noted.

On a muted performance in Q1FY26, Advani attributed it to deferred demand. He emphasised that air conditioners remain a top priority for consumers, but with a ticket size of over Rs 35,000, it's often a multi-season purchase.

“This is just a postponed purchase. It's very clear that an air conditioner is on top of everyone's purchase list. However, it's a big purchase decision, Rs 35,000 plus…..we're quite hopeful that there will be strong demand coming back in the second half of the year and as we go forward. I think the long-term outlook for air conditioners is very strong. We expect a CAGR of 20% for the industry,” the CMD said.

On inventory position, Advani commented that the company is currently holding about 75 days' of inventory. This is roughly 30 days higher than the normal post-summer level of 45 days.

Unlike some competitors, the company hasn't resorted to aggressive discounting, due to better inventory management, according to Advani. The company had implemented a price increase ahead of FY26, which contributed positively to Ebit.

Commenting on this further, Advani said that Blue Star is targeting an Ebit margin improvement of at least 100 basis points over the next few years.

“We expect the unitary cooling products business to grow faster. So, if that happens, the unitary cooling products' Ebit margin becomes higher……we've been looking to improve our Ebit by at least 100 basis points over the next few years," he added.

The company operates in three segments: electro-mechanical projects and commercial air conditioning systems; unitary products and professional equipment and industrial solutions.

In Q1FY26, Blue Star reported a revenue of Rs 2,982 crore, up 4% from Rs 2,865 crore in Q1FY25. However, its Ebitda declined 16% to Rs 200 crore from Rs 238 crore a year ago. The company's net profit also fell 28% year-on-year to Rs 121 crore, compared to Rs 169 crore in Q1FY25.

Shares of Blue Star Ltd. closed 3.08% higher at Rs 1,825 apiece on the NSE on Thursday, while the benchmark Nifty50 settled flat at 24,596.15, up 0.09%.