Bluspring's profit rises 95%, but debt jumps sixfold

BLUSPRING Bluspring Enterprises Limited (BLUSPRING) reported a 95% year on year increase in Q2 FY27 profit after tax to ₹32 crore, excluding Foundit. Revenue increased 49% to ₹1,250 crore, while EBITDA grew 130% to ₹67 crore. The improvement in margins is particularly interesting. EBITDA margin increased from 3.5% to 5.4%, an expansion of 188 basis points. But there is another side to this growth story. Bluspring has expanded its business through the acquisitions of STEAG India and LSG Sky Chefs India. These acquisitions have increased its exposure to energy and engineering services, as well as aviation catering. The Smart Infra, Energy and Engineering segment reported revenue of ₹449 crore, up 189% year on year, with an EBITDA margin of 10.9%. It also added 16 new contracts during the quarter, with an annual contract value of ₹641 crore. However, the acquisitions have changed the company's financial position. Consolidated debt increased to ₹498 crore at September 2026, compared with ₹80 crore at March 2026. There is a positive development in cash generation. Operating cash flow for H1 FY27 was ₹55 crore, compared with an outflow of ₹127 crore in the previous year. But the company also spent ₹150 crore, net of cash acquired, on the STEAG and LSG acquisitions during the first half. This is where I would be careful. The improvement in earnings is encouraging, but the business now carries substantially more debt. The operating cash flow recovery is a positive sign, although it has not yet covered the total investing outflow. My view is that Bluspring is beginning to show the earnings benefit of its expanded business, but the real test is whether these acquisitions generate enough incremental cash flow to justify the additional debt. My stance: The operating performance is improving, but I would want evidence of stronger cash generation and debt control before becoming more constructive.