Blue Star Q2 revenue rises 21% but core profit remains flat

Blue Star Limited reported revenue from operations of Rs 2,930.95 crore for the quarter ended September 30, 2026, up 21% from a year earlier, while profit before exceptional items and tax increased just 1.6% to Rs 134.28 crore. A Rs 23.02 crore exceptional item lifted profit for the period to Rs 123.91 crore from Rs 98.78 crore.

Why did Blue Star's core profit lag revenue growth?

Blue Star's profit before exceptional items and tax rose by Rs 2.11 crore year on year, even as revenue from operations increased by Rs 508.58 crore in the quarter ended September 30, 2026. Total expenses rose 22.4% to Rs 2,813.13 crore from Rs 2,299.22 crore, a faster rate than the 21.0% increase in revenue from operations.

Cost of materials consumed, including direct project and service cost, rose to Rs 2,068.05 crore from Rs 1,735.23 crore. Employee-benefit expense increased to Rs 251.73 crore from Rs 227.21 crore, other expenses rose to Rs 260.26 crore from Rs 208.72 crore, and depreciation and amortisation increased to Rs 67.90 crore from Rs 43.35 crore.

Blue Star reported an operating margin of 6.91% for the September 2026 quarter, down from 7.57% a year earlier but up from 5.18% in the preceding June 2026 quarter. The company defines operating margin as operating earnings before interest, tax, depreciation and amortisation divided by revenue from operations, while net profit margin was 4.20%, against 4.06% a year earlier.

What lifted Blue Star's reported profit in Q2?

Blue Star's reported profit for the period rose 25.4% to Rs 123.91 crore because the September 2026 quarter included a Rs 23.02 crore exceptional item. There was no exceptional item in the corresponding September 2025 quarter, and profit before tax therefore rose to Rs 157.30 crore from Rs 132.17 crore.

Tax expense was unchanged at Rs 33.39 crore in both the September 2026 and September 2025 quarters. Current tax declined to Rs 32.80 crore from Rs 33.40 crore, while deferred tax changed to a Rs 0.59 crore charge from a Rs 0.01 crore credit; basic and diluted earnings per share, not annualised for quarters, rose to Rs 6.03 from Rs 4.80.

Other income increased to Rs 15.79 crore from Rs 10.01 crore, while finance cost declined marginally to Rs 16.85 crore from Rs 16.92 crore. Blue Star also recorded a Rs 0.67 crore share of profit from joint ventures, compared with a Rs 0.99 crore share of loss in the prior-year quarter.

Which Blue Star businesses drove September-quarter revenue?

Blue Star's electro-mechanical projects and commercial air-conditioning systems business produced the largest revenue contribution at Rs 1,935.99 crore in the September 2026 quarter, up from Rs 1,664.21 crore a year earlier. Unitary products revenue rose to Rs 897.66 crore from Rs 693.81 crore, while professional electronics and industrial systems revenue increased to Rs 97.30 crore from Rs 64.35 crore.

The quarterly revenue mix changed from June 2026, when unitary products generated Rs 1,689.31 crore and electro-mechanical projects and commercial air-conditioning systems generated Rs 1,625.05 crore. In September 2026, electro-mechanical projects and commercial air-conditioning systems became the largest segment, while unitary products declined sequentially by Rs 791.65 crore; Blue Star states that the unitary products segment is seasonal.

How did Blue Star's segment profitability change?

Blue Star's total segment result, measured as profit before interest and tax, declined to Rs 176.99 crore from Rs 196.03 crore despite the Rs 508.58 crore increase in quarterly revenue. The electro-mechanical projects and commercial air-conditioning systems segment result fell to Rs 133.15 crore from Rs 147.14 crore, while the unitary products result declined to Rs 20.74 crore from Rs 42.72 crore.

Professional electronics and industrial systems was the only segment with a higher result, rising to Rs 23.10 crore from Rs 6.17 crore. Interest and other financial charges were Rs 16.85 crore against Rs 16.92 crore, while unallocable expenditure declined to Rs 26.53 crore from Rs 45.95 crore, leaving profit before the joint-venture share, exceptional items and tax at Rs 133.61 crore versus Rs 133.16 crore.

For the half year ended September 30, 2026, revenue from operations rose to Rs 6,308.87 crore from Rs 5,404.62 crore, while profit before exceptional items and tax fell to Rs 259.70 crore from Rs 295.40 crore. Half-year segment result for unitary products declined to Rs 70.43 crore from Rs 130.19 crore, and the electro-mechanical projects and commercial air-conditioning systems result fell to Rs 243.37 crore from Rs 258.76 crore.

What do Blue Star's balance-sheet figures show?

Blue Star reported total assets of Rs 8,485.88 crore at September 30, 2026, compared with Rs 8,575.98 crore at March 31, 2026. Trade receivables declined to Rs 1,674.71 crore from Rs 2,139.70 crore, inventories increased to Rs 2,275.19 crore from Rs 2,166.20 crore, and cash and cash equivalents fell to Rs 181.20 crore from Rs 366.99 crore.

Current borrowings were Rs 483.63 crore at September 30, 2026, down from Rs 626.80 crore at March 31, 2026. The debt-equity ratio was 0.14, compared with 0.27 a year earlier, while net worth was Rs 3,486.70 crore, up from Rs 3,110.96 crore in the September 2025 quarter.

The current ratio was 1.32 at September 30, 2026, against 1.28 a year earlier and 1.31 at March 31, 2026. Debtors turnover was 53.93 days compared with 55.98 days in the September 2025 quarter, while inventory turnover was 90.32 days compared with 118.83 days.

Conclusion

Blue Star delivered higher September-quarter revenue across all three operating segments, but the gains did not translate proportionately into pre-exceptional profit. Higher materials, employee, other and depreciation costs coincided with a Rs 19.04 crore decline in total segment result, while the Rs 23.02 crore exceptional item accounted for the larger increase in reported profit for the period.

The next period will show how the disclosed seasonality in unitary products affects the segment after its revenue declined from Rs 1,689.31 crore in June 2026 to Rs 897.66 crore in September 2026. Receivables of Rs 1,674.71 crore, inventories of Rs 2,275.19 crore and current borrowings of Rs 483.63 crore are also reported balance-sheet measures to monitor after September 30, 2026.