Pent-up demand fuels Blue Star's air conditioners sales growth by 30%

Robust demand from Tier-III and Tier-V towns spurs growth

Blue Star witnessed 30 per cent year-on-year (Y-o-Y) sales growth in its air conditioners this festival season on the back of pent-up demand in October and November triggered by the unseasonal rainfall during summer.
 

About 90 per cent of buyers purchased the company’s air conditioners for the first time. “We will grow more than 30 per cent compared with the festival season last year. Whenever there is a summer season washout, there is a pent-up demand that comes up,” B Thiagarajan, managing director of Blue Star, told Business Standard.
 

He said in commercial refrigeration, the company is witnessing unprecedented growth as orders are coming in from showrooms, factories, data centres, and metro railways. “Even in the commercial space, demand is coming in from Tier-III and Tier-V towns where hotels and hospitals are coming up and driving growth,” Thiagarajan said. The company, however, has not seen strong demand come in from commercial complexes.
 

In September, the company raised Rs 1,000 crore via Qualified Institutional Placement and will use the funds for capacity expansion over the next five years. Blue Star is currently expanding its deep freezer facility in the Wada area as it starts making refrigerators of below 300 litres to cater to the demand coming for ice creams from rural markets. The size of the refrigerators has come down to around 150 to 200 litres as companies push for rural penetration of ice creams.
 

The company will also use the amount for research and development and the third investment will be towards digitalisation. Thiagarajan said the company is investing in R&D to make sure that its products are not discounted but available at various price points.
 

The company expects that margins will improve due to backward integration and also due to improvement of margins in certain categories like commercial air conditioning and commercial refrigeration. In the room air conditioner market, Thiagarajan pointed out that there is a stiff fight for market share.
 

He said a lot has to be done to become a Rs 15,000 crore company. Blue Star has crossed the Rs 8,000 crore mark and its top line may cross Rs 10,000 crore by the end of the current financial year. In the next three to four years, it expects to hit the Rs 15,000 crore mark.