Current Rating and Its Significance
On 02 January 2026, Blue Star Ltd.'s rating was revised to 'Hold' from 'Sell' by MarketsMOJO, reflecting a positive shift in the company's overall assessment. The Mojo Score improved by 6 points, moving from 44 to 50, signalling a more balanced outlook. A 'Hold' rating suggests that investors should maintain their existing positions rather than aggressively buying or selling, as the stock presents a moderate risk-reward profile at present.
Here's How Blue Star Ltd. Looks Today
As of 04 January 2026, Blue Star Ltd. is a midcap company operating in the Electronics & Appliances sector. The stock has experienced mixed performance recently, with a one-day gain of 2.20% and a year-to-date return of 4.51%. However, over the past year, the stock has underperformed the broader market, delivering a negative return of -20.89% compared to the BSE500 index's positive 5.35% return. This divergence highlights some challenges the company faces despite its underlying strengths.
Quality Assessment
The company’s quality grade is rated as excellent. Blue Star Ltd. has demonstrated strong long-term fundamental strength, with a compound annual growth rate (CAGR) of 62.52% in operating profits. This robust growth underscores the company’s ability to generate consistent earnings over time. Additionally, the firm maintains a low Debt to EBITDA ratio of 0.40 times, indicating a conservative leverage position and strong debt servicing capability. The average Return on Equity (ROE) stands at 17.93%, reflecting efficient utilisation of shareholders’ funds and healthy profitability.
Valuation Considerations
Despite its strong fundamentals, Blue Star Ltd. is currently considered very expensive in valuation terms. The stock trades at a premium with an Enterprise Value to Capital Employed (EV/CE) ratio of 10.3, which is significantly higher than its peers’ historical averages. The Return on Capital Employed (ROCE) is a solid 19.4%, but the price investors pay for this capital efficiency is elevated. The company’s Price/Earnings to Growth (PEG) ratio is notably high at 33.3, suggesting that the market’s expectations for future growth are priced in at a steep premium. This expensive valuation may limit upside potential in the near term and warrants caution from value-conscious investors.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend
The financial grade for Blue Star Ltd. is currently flat. The latest half-year results ending September 2025 showed little change, with cash and cash equivalents at a low ₹111.45 crores. Profit growth over the past year has been modest, rising by just 2.1%. This flat trend suggests that while the company is stable, it is not currently experiencing significant financial acceleration. Investors should note that the company’s ability to maintain steady earnings amidst a challenging environment is a positive, but the lack of strong growth momentum may temper enthusiasm.
Technical Outlook
From a technical perspective, the stock is rated as mildly bearish. Despite short-term gains such as a 3.87% rise over the past month, the stock has declined by 3.51% over three months and underperformed the market over the last year. This technical weakness indicates some caution among traders and suggests that the stock may face resistance in breaking out to higher levels in the near term. Investors relying on technical signals may prefer to wait for clearer bullish momentum before increasing exposure.
Institutional Interest and Market Position
Blue Star Ltd. enjoys strong institutional backing, with 41.37% of its shares held by institutional investors as of the latest data. This stake has increased by 1.79% over the previous quarter, signalling confidence from sophisticated market participants who typically conduct thorough fundamental analysis. Such support can provide stability to the stock price and may indicate that institutions view the company as a viable medium-term investment despite recent underperformance.
Summary for Investors
In summary, Blue Star Ltd.’s 'Hold' rating reflects a balanced view of its current prospects. The company boasts excellent quality metrics and strong long-term fundamentals, but these are offset by a very expensive valuation and a flat financial trend. The mildly bearish technical signals and recent underperformance relative to the broader market further support a cautious stance. For investors, this rating suggests maintaining existing positions while monitoring for clearer signs of growth acceleration or valuation normalisation before committing additional capital.
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Looking Ahead
Investors should keep a close eye on Blue Star Ltd.’s upcoming quarterly results and any shifts in market sentiment that could influence valuation multiples. Improvements in cash reserves, profit growth, or technical momentum could prompt a reassessment of the stock’s rating. Conversely, sustained flat financial trends or further valuation pressures may reinforce the current cautious stance. Given the company’s strong institutional interest and solid quality metrics, it remains a stock worth monitoring for potential opportunities aligned with broader market conditions.
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