Blue Star Limited

Industrials — Building Products & Equipment · NSE

₹1,567.60−₹24.40 (−1.53%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Blue Star Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Blue Star Limited provides air conditioning and commercial refrigeration products, air and water purifiers, air coolers, cold storages, and specialty products in India.

IndustryBuilding Products & Equipment

SectorIndustrials

Employees3,655

Annual revenue₹12,250 Cr

How does it make money?

Turns over ₹12,250 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 3,655 employees supports ₹3.35 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹3.35 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 20.7%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 15.4% against a peer median of 15.2% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE15.2%

What is the outlook?

26 analysts covering the stock expect revenue to grow about 17.1% and earnings to grow about 39.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.1%

Est. earnings growth+39.2%

Analysts26

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +55% while net margin moved -15% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+55%

Margin effect-15%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 63.3x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 65.4x
✗ P/B of 9.39x is a steep premium to book

Quality vs. Valuation

Company Quality

57/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

46/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

63.3x

3Y Median

65.4x

40 monthly readings · mean 68.6x · range 35.6x–103.0x

Sector Median

88.8x

median of 3 sector peers

🟡Currently trading close to its 3y median of 65.4x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 29% below the peer median of 88.8x.

vs. its own history

Fair

65.4x median over 40 months · -3%

vs. sector peers

Cheap

88.8x median of 3 peers · -29%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

33.1x

PEG

6.57

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 6.5% to 8.1% over 3 years.
High return on capital employed
ROCE of 20.7% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.24x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 30.1% to 15.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 37.3% to 20.7% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Free cash flow is negativeFinancial
Free cash flow was -₹175 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 20.7% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 6.5% to 8.1%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 29% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Returns on shareholder capital are falling
ROE has dropped from 30.1% to 15.4%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 15.8% CAGR
Latest reported year was 13.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 6%✓ 8.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹175 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 18%✓ 20.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹32,229 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

63.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

9.39x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹24.77

Profitable

Profitable on a per-share basis

ROE

15.4%

Strong

Strong capital efficiency

ROCE

20.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.24x

Low

Conservative leverage

Revenue Growth (YoY)

13.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-15.1%

Falling

Profits are shrinking

Dividend Yield

0.54%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹175 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

41.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

3.5%

Weak

Thin margins leave little room for error

Net Margin

4.0%

Average

Average bottom-line conversion

Current Ratio

1.31

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.19

Defensive

Steadier than the market

52W Range Position

23%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1548.5 / 1519.3

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹7,898 Cr	₹9,576 Cr	₹11,853 Cr	₹12,250 Cr	+15.8%
EBITDA	₹513 Cr	₹690 Cr	₹932 Cr	₹987 Cr	+24.4%
EBITDA Margin	6.5%	7.2%	7.9%	8.1%	—
PAT (Net Profit)	₹400 Cr	₹415 Cr	₹591 Cr	₹528 Cr	+9.6%
EPS	₹20.79	₹20.77	₹28.76	₹25.65	+7.3%
ROE	30.1%	15.9%	19.3%	15.4%	—
ROCE	37.3%	22.2%	24.9%	20.7%	—
Total Debt	₹662 Cr	₹243 Cr	₹381 Cr	₹810 Cr	+7.0%
Free Cash Flow	-₹117 Cr	-₹152 Cr	₹316 Cr	-₹175 Cr	—

🟢 Revenue has grown at 15.8% a year over 3 years.

🟢 EBITDA has grown at 24.4% a year over 3 years.

🟢 EBITDA Margin has risen from 6.5% to 8.1% over 3 years (+1.6 pts).

🟢 PAT (Net Profit) has grown at 9.6% a year over 3 years.

🟢 EPS has grown at 7.3% a year over 3 years.

🔴 ROE has fallen from 30.1% to 15.4% over 3 years (-14.7 pts).

🔴 ROCE has fallen from 37.3% to 20.7% over 3 years (-16.6 pts).

🔴 Total Debt has grown at 7.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹8,576 Cr

Total Liabilities

₹5,142 Cr

Cash & Equivalents

₹367 Cr

Operating Cash Flow

₹154 Cr

Capex

-₹329 Cr

Shareholding (proxy)

Institutional Holding

34.9%

Insider Holding

37.0%

Corporate Actions

Next Earnings

29 Oct 2026

Dividend Rate

₹8.5

Ex-Dividend Date

17 Jul 2026

Analyst Consensus

Recommendations

13 Buy · 8 Hold · 5 Sell

Target Price (Mean)

₹1,666.08

+6.3% vs CMP

Target Range

₹1,132 – ₹2,021

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

4 mixed2 general

Blue Star (NSEI:BLUESTARCO) Stock Forecast & Analyst Predictions

Simply Wall Street, 14 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Blue Star Share Price - Live NSE: BLUESTARCO Stock Price & Chart

Upstox, 16 Oct

Blue Star Limited Just Missed EPS By 29%: Here's What Analysts Think Will Happen Next

Simply Wall Street, 09 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Nykaa, Tata Consumer, Blue Star shares: Top stocks to buy | What Kotak Neo suggests - Target price, stop loss

Livemint, 15 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Blue Star shareholders approve Nikhilesh Panchal as Independent Director

scanx.trade, 16 Oct

Blue Star Q1 FY27 Results on August 6, Earnings Call August 7: All Eyes on Margins and AC Demand

NiftyTrader, 06 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingBusiness Quality · Growth · Profitability · Risk

WeakValuation

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑