Synopsis: Blue Star’s next growth phase is being shaped by businesses beyond room air conditioners. Commercial refrigeration, MEP, commercial air conditioning, exports and professional electronics align with long-term trends like cold chains, data centres, manufacturing capex and healthcare. Execution and capital discipline will decide how meaningfully these segments scale together.
Blue Star is no longer just a room air conditioner story. Beneath the familiar consumer-facing brand sits a set of businesses that are quietly aligning with some of India’s strongest long-term trends, from cold chains and data centres to manufacturing capex and healthcare infrastructure. Each of these segments is scaling at a different pace, addressing a different customer, and earning a different margin profile. Together, they form the real engine that could define Blue Star’s next growth cycle. But which of these businesses will matter the most over the next few years?
Commercial Refrigeration Segment
According to a report from Motilal Oswal, India’s commercial refrigeration market is currently estimated to be around Rs. 40-50 billion and is expected to grow steadily on the back of urbanisation, changing food consumption habits, and the rapid expansion of organised retail and quick commerce. Demand is structurally stronger in urban centres, where packaged, frozen and ready-to-eat food consumption continues to rise, while sectors such as QSR, e-commerce, pharmaceuticals and cold storage are increasingly dependent on reliable temperature-controlled infrastructure. Alongside demand growth, the push towards energy-efficient and sustainable equipment has forced manufacturers to upgrade their offerings, driving innovation across the segment continuously.
Application Mix and End-User Demand Trends
Between FY25 and FY28, the commercial refrigeration market is estimated to grow at a compounded rate of around 13 percent, reaching nearly Rs. 70 billion by FY28. Retail remains the largest application, accounting for roughly 46 percent of demand, followed by restaurants and hotels at around 27 percent. Food processing contributes close to 18 percent, while hospitals and pharmacies account for about 4 percent, with the remaining 5 percent spread across other applications.
Blue Star’s Market Leadership and Manufacturing Strength
Blue Star continues to hold a dominant position with nearly 31 percent market share in deep freezers, including hard-top and glass-top models, as well as negative temperature storage units and water coolers. In modular cold rooms or walk-in coolers, Blue Star’s market share stands at around 32 percent, with strong presence across restaurants, pharmaceuticals, logistics and warehousing. While water coolers form a smaller and relatively stable business, the company retains leadership even in this niche. All commercial refrigeration products are manufactured at the company’s Wada and Ahmedabad facilities, giving it better control over quality, costs and innovation. Over time, Blue Star has also expanded its cold chain solutions portfolio to address a wider set of industry requirements.
Near-Term Performance and Demand Outlook
Despite intermittent rains impacting seasonal demand, the commercial refrigeration business recorded growth of around 7 to 8 percent in the first half of FY26. With GST rate reductions on several food products and improving consumption trends, demand momentum is expected to strengthen in the second half of the year. The company is also expanding its range of energy-efficient and IoT-enabled products, while increasing penetration in Tier 2 and Tier 3 markets through more localised distribution and service networks.
Long-Term Growth Tailwinds and Channel Expansion
Structurally, the segment remains on a strong growth path. Penetration into Tier 3 to Tier 5 towns, modernisation of kirana stores, rising frozen food consumption, aggressive expansion by QSR chains and the rapid rise of quick commerce are all acting as long-term tailwinds. Quick commerce alone now accounts for around 10 percent of segment demand, driven by last-mile cold chain needs such as delivery-focused cold rooms and deep freezers.
Product Innovation and Portfolio Expansion
In FY25, the company launched a wide range of new products, including deep freezers capable of cooling down to minus 26 degrees Celsius, offered in capacities ranging from 60 to 600 litres. These products cater to dairy, ice cream, restaurants and supermarkets. It also introduced BIS-certified water coolers with eco-friendly refrigerants and faster cooling, covering capacities between 15 and 120 litres. In addition, Blue Star offers advanced cold room solutions using PUF-insulated panels, kitchen refrigeration products such as blast freezers and reach-in chillers, and supermarket-focused multideck chillers with energy-saving night curtains and flexible shelving.
MEP (Mechanical, Electrical, Plumbing) Segment
Business Scope and Sector Exposure
Blue Star’s MEP business operates across electrical systems, air conditioning, firefighting and plumbing, catering to large-scale infrastructure and commercial projects. These include office complexes, IT parks, airports, hotels, hospitals and metro rail projects. Over the last few years, manufacturing facilities and data centres have emerged as important growth drivers, supplementing traditional segments.
Vertical Structure and Margin Profile
The business is broadly divided into four verticals. Infrastructure projects such as metro railways, airports and water systems typically have long execution cycles of three to five years. Commercial buildings, including malls and office spaces, are highly competitive with lower entry barriers, often resulting in thinner margins and limited control as projects are usually subcontracted. Manufacturing facilities represent a more attractive segment, with time-bound execution, client-driven timelines and better profitability. Data centres form the most specialised segment, with stringent quality requirements, higher value addition and scope for premium pricing.
Blue Star has deliberately shifted its focus towards manufacturing facilities, data centres and select infrastructure projects, where its technical capabilities allow it to differentiate and earn better margins. These segments also tend to offer stronger cash flows, depending on customer profiles. Beyond project execution, the company provides value-added aftersales services such as revamps, retrofits, upgrades and operational support, ensuring long-term engagement with clients.
Data Centre Capabilities and Technology Expansion
In the data centre space, Blue Star plays a critical role as a comprehensive MEP service provider, handling ducting, piping, insulation, electrical works, plumbing and cooling systems. While civil work involvement is limited, the company acts as a key system integrator for most major data centre operators in India and holds a significant share of MEP solutions in this segment. It also manufactures specialised chillers designed for data centre applications and is expanding this product portfolio further. In parallel, the company is exploring partnerships with global players to access advanced liquid cooling technologies.
Order Book, Execution Trends and Key Wins
As of September 2025, the MEP order book stood at Rs. 48.4 billion, reflecting a decline of around 4 percent year-on-year. Execution of manufacturing and data centre projects has remained steady, but fresh order inflows have been relatively muted, with infrastructure projects taking longer than expected to materialise. The company remains selective in bidding, prioritising margin quality and cash flow visibility over aggressive order growth.
During FY24, Blue Star entered the semiconductor segment by securing an HVAC order for India’s largest semiconductor plant in Gujarat, marking an important strategic milestone. Its customer base includes names such as Amazon Web Services, ST Telemedia, Nxtra Data, Apollo Hospitals, Micron Semiconductor, Tata Electronics, Jewar Airport, TCS, Godrej, Medanta Hospital and Maruti Suzuki’s upcoming Sonepat facility.
CAC Segment
The Commercial Air Conditioning or CAC business caters primarily to B2B customers and includes packaged and ducted air conditioning systems, VRF systems, chillers, data centre chillers, process chillers and aftermarket services. The total CAC market in India is estimated at around Rs. 50 billion. Blue Star enjoys leadership positions across multiple categories, with approximately 50 percent market share in ducted air conditioning systems, 45 percent in scroll chillers, and around 20 percent each in VRF systems and screw chillers.
The company’s consistent focus on innovation and timely product launches has helped it gain market share across segments. Its portfolio includes energy-efficient, BIS-compliant packaged and ducted systems, next-generation inverter-based ducted systems, inverter heat pump solutions and a wide range of chillers. Blue Star has also strengthened its positioning across healthcare, industrial, retail and education sectors by offering customised solutions.
Over the years, the company has introduced several notable products. In FY25, it launched data centre chillers with capacities up to 550 TR, designed for higher chilled water leaving temperatures above 20 degrees Celsius, and brine chillers with capacities up to 150 TR capable of operating at minus 20 degrees Celsius. In FY24, centrifugal chillers with capacities up to 1,000 TR were introduced, featuring refrigerant leak detection systems, along with VRF Lite inverter systems for premium residential applications. Earlier years saw launches across inverter ducted systems, mini VRF systems, screw chillers and side discharge VRF units. This steady cadence of product development has been a key driver of the CAC business’s competitive strength.
Export Segment
Blue Star exports HVAC and commercial refrigeration products to more than 18 countries across the Middle East, Africa, SAARC and ASEAN regions. To build its global presence, the company has set up wholly-owned subsidiaries in the US, Europe and Japan, while joint ventures in Qatar and Malaysia enable it to execute MEP projects in those markets. International operations are largely B2B-focused and fall under Segment I of the company’s reporting structure, while domestic RAC and commercial refrigeration businesses are housed under Segment II.
The company has consciously stayed away from overseas residential air conditioning markets, particularly in the Middle East, due to intense competition from Chinese manufacturers. As a result, exports of RAC and commercial refrigeration products remain limited and largely opportunistic. Instead, Blue Star is targeting high-value, energy-efficient and decarbonisation-led technologies such as VRF systems, variable frequency drives and low-temperature heat pumps. These products are being custom-developed for global OEMs and aligned with international quality standards.
The company has already secured initial product approvals from three large international OEMs and has begun limited commercial shipments. While export revenues have been slower to scale due to global macro headwinds and weak demand in the US and Europe, Blue Star expects meaningful traction from FY27 onwards. Rather than pushing volumes aggressively, the strategy is to position itself as a credible China-plus-one alternative, supported by expanded R&D and manufacturing capabilities in India.
Professional Electronics & Industrial Systems Segment
Through its wholly-owned subsidiary Blue Star Engineering & Electronics, the company operates in advanced technology products and system integration solutions across healthcare, automotive, steel, aerospace, BFSI and other industries. Over time, this business has evolved from being a distributor to a system integrator and value-added reseller, offering customised end-to-end solutions.
The segment operates across three verticals: MedTech solutions, data security solutions and industrial solutions. Industrial solutions include material testing, non-destructive testing, metrology, warehouse automation and electronics assembly and testing. The company also runs a refurbishment facility in Bhiwandi for pre-owned imaging systems such as MRI and CT scanners, and operates customer experience centres in Thane and Chennai.
Over the last five years, this segment has contributed around 4 percent of revenue and 8 percent of EBIT, with average EBIT margins of about 15 percent between FY21 and FY25. In FY25, margins declined to around 9 percent due to regulatory challenges in the MedTech business and slower momentum in data security. While industrial solutions are gaining traction, growth has not yet been sufficient to offset the slowdown in other verticals. Looking ahead, recovery is expected to be driven by a revival in private capex, improving healthcare demand and a pickup in data security spending. Revenue is estimated to grow at around 10 percent CAGR over FY26 to FY28, with margins improving to 12 to 13 percent through cost rationalisation and a better business mix.
Taken together, these businesses highlight how Blue Star is positioning itself beyond its traditional identity. With exposure to cold chains, data centres, manufacturing capex, energy efficiency and healthcare, the company appears well-aligned with multiple structural growth themes. The uestion now is whether execution, capital allocation and market conditions will allow these engines to fire in sync, and if they do, how big could the next growth phase really be?
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