BLUESTAR Rs 1550
Bluestar is one of those companies that quietly sits in a sweet spot—benefiting from both consumer trends and infrastructure-led growth. It’s not a pure B2C brand like some of its peers, but that might actually be its advantage.
Let us break it down.
The business is split almost evenly between two segments (it has a third segment also, but it is too small yet).
The first, which includes EMP (electrical, mechanical, plumbing), commercial AC, and exports, is more B2B in nature.
What’s exciting here is the EMP business, especially because of the data center boom happening in India which is translating to solid traction for Bluestar.
Plus, they’ve got a strong market position in commercial AC—#1 in ducted systems and #2 in VRF and screw chillers. Sure, commercial AC grows at a slower pace (~11–12%), but it’s stable and backed by India’s broader infra push.
Then there’s the export story, which is very interesting. A few quarters back, Bluestar set an ambitious goal: to grow exports to $500 million in three years. That’s a bold leap, especially considering their entire RAC and Comm Ref segment brought in ₹5,600 crore in FY25. The tech is already world-class—now it’s about cost competitiveness. There’s a China+1 opportunity here, though global headwinds like tariffs and geopolitical instability could delay things a bit.
Now, onto the RAC (room air conditioners) and Commercial Refrigeration segment, which is more B2C.
Bluestar’s RAC business has steadily grown faster than the market for three years straight, pushing its market share from ~13% to 14%. It’s aiming for 15% in the next couple of years.
Commercial refrigeration is another under-the-radar growth engine. Management sees 30% growth potential here due to under-penetration, and they’ve hinted it could be a major growth lever going forward.
In the short-term AC sales are as fickle as weather!
In April 2025, industry is estimated to have degrown by 20-25% against expectations of a bumper season due to unexpected rains causing correction in almost all AC stocks. This has thrown up opportunities since this is more of a blip than a structural issue. Over the medium term, the RAC industry is expected to grow at 18–20% CAGR, and Bluestar wants to outpace that.
Bluestar’s FY25 was strong with Revenues up 24%, Ebitda up 33%, PAT up 42%. So, this might actually be a good entry point in a company with a healthy balance sheet, strong brand recall, and exposure to both consumer and capex themes trading at FY25 PE of 53.
Yes, there are risks. The RAC market is ultra-competitive. Weather plays a role. Export growth depends on global dynamics and the company has to maintain margins while growing. But if Bluestar delivers 20% PAT CAGR over 5 years, as the management expects it to, then at reasonable exit PE of 35, you’re looking at a steady compounding returns of @ 10%—not a flashy rocket ship but one that could surprise on the upside if it is able to execute well especially on exports front.