Blue Star Ltd, an air conditioning and commercial refrigeration solutions provider, expects to maintain its revenue growth momentum in the second half of FY27, supported by festive-season demand for room air conditioners, a revival in commercial air conditioning and refrigeration, and fresh project opportunities in data centres.
In its Q2FY27 and H1FY27 investor update, the company said it expects more orders for data centre mechanical, electrical and plumbing (MEP) projects to be finalised in the coming months. Its immediate focus will be on improving margins through price revisions and product cost optimisation.
Demand outlook remains mixed
Blue Star said the extended summer season supported strong room AC demand in Q2FY27 and helped drive revenue growth. However, margins remained under pressure across businesses because of rising material costs and the inability to fully pass on the increases to customers.
The company cautioned that a shortfall in monsoon rainfall, lower farm income and an interest rate hike could affect demand. On the positive side, the conclusion of the US trade deal and a possible resolution of the West Asia crisis could support business prospects.
Room AC business retains market share
The delayed monsoon and extended summer supported demand for room air conditioners, with Blue Star maintaining its market share. Although the company has implemented periodic price increases, it has been able to pass on only part of the material cost escalation.
The company is also restructuring its product portfolio by introducing differentiated and cost-optimised stock-keeping units (SKUs) to improve profitability. Various cost optimisation initiatives are beginning to show results.
International business expands opportunities
Blue Star said supplies of its heat pump solutions to the US market continued despite challenges in supply chains and logistics. It is also developing and testing products and solutions for additional original equipment manufacturers (OEMs) in the US and Europe.
The company expects international business to accelerate once uncertainties relating to tariffs are resolved.
Commercial business sees revival
Demand for commercial refrigeration products is beginning to recover, although margins remain under pressure because the company has not been able to fully pass on higher material costs.
The commercial air conditioning business recorded strong revenue growth during the quarter, driven by demand from healthcare, education and industrial segments.
Data centres drive project enquiries
Order inflows in the electro-mechanical projects business during the quarter were mainly driven by data centres. Enquiries from factories were also encouraging, and the company expects a significant increase in order inflows in the coming months.
However, billing growth was sluggish during the quarter as execution of some projects faced delays.