Blue Star expects to recover the lost ground in Q3 FY26 during the festive season, and ahead of BEE star label change in January 2026. Due to near term moderation in RAC demand, Dolat Capital has reduced its FY26E/27E EPS estimates by 2/2% to Rs 34/42 resp.
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Dolat Capital Report
We attended Blue Star Ltd.'s analyst meet with their MD, Mr. B. Thiagarajan, wherein the company highlighted that despite initial expectation of demand revival in May-June'25 (following a subdued start to Q1 FY26), the summer demand for room AC's continued to slump due to early monsoon. This led to elevated channel inventories.
The company expects to recover the lost ground in Q3 FY26 during the festive season, and ahead of BEE star label change in January 2026. Due to near term moderation in RAC demand, we have reduced our FY26E/27E EPS estimates by 2/2% to Rs 34/42 resp.
However, the medium to long term outlook of the AC industry is promising. We value the stock at 44 times FY27E EPS and maintain ‘Buy' rating with a revised target price of Rs 1,882 (earlier Rs 1,929).
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