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    Blue Star

    BLUESTARCO
    Consumer Durables·8 May 2025
    Management Summary

    Blue Star delivered strong financial performance in FY25, with significant revenue and profit growth driven by robust demand in its core segments. Despite a challenging start to the summer season in April, the company maintained growth and is focused on market share expansion and strategic investments in R&D and localization. The order book remains healthy, providing good visibility for future growth.

    Highlights

    7

    • Consolidated revenue for FY25 crossed Rs. 12,000 crores, reaching Rs. 11,976.7 crores, a 23.6% YoY growth.

    • Net profit before exceptional items for FY25 grew 38.6% YoY to Rs. 772.4 crores.

    • FY25 EBITDA margin improved by 40 bps to 7.3% from 6.9% in FY24.

    • Q4 FY25 revenue from operations grew 20.8% YoY to Rs. 4,018.96 crores.

    • Carried forward order book increased 9.9% YoY to Rs. 6,263.4 crores as of March 31, 2025.

    • Room AC business achieved 1.53 million units in sales volume for FY25, with market share close to 14%.

    • A dividend of Rs. 9 per share was recommended for FY25, up from Rs. 7 per share in FY24.

    Concerns

    1

    • Weather Volatility and Impact on RAC Demand

    What Changed2

    vs Q1 FY26

    Guidance items9 → 8 (-1)Risks discussed4 → 8 (+4)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations₹11,976.7 Cr+23.6%YoY
    2. 02EBITDA (excl. other income)₹875.9 Cr+31.7%YoY
    3. 03EBITDA Margin7.3%+0.4%YoY
    4. 04PBT (before exceptional items)₹772.4 Cr+38.6%YoY
    5. 05Net Profit₹591.2 Cr+42.7%YoY

    Segment breakdown

    • Electro-Mechanical Projects and Commercial Air Conditioning Systems₹5,998 Cr50.1%
    • Unitary Products₹5,621.1 Cr47.0%
    • Professional Electronics and Industrial Systems₹348.6 Cr2.9%
    Donut· Share of Revenue (FY25)

    Order Book

    high confidence

    Total Value

    ₹ 6,263.4 crores

    as of 2025-03-31

    quantified
    9.9% YoY

    Inflow this qtr

    ₹ 1,439.9 crores

    "The carried forward order book reached its highest-ever level, reflecting operational rigor and efficiency, and providing a strong pipeline for growth."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹9/share (final)

    Liquidity

    Cash ₹640.35 crores

    The company reported a net cash position of Rs. 640.35 Cr as of March 31, 2025, compared to Rs. 455.9 Cr as of March 31, 2024.

    Guidance & targets

    8
    CategoryTargetPriority
    Market Share
    Room AC Market Share
    15%
    		High
    Revenue
    Overall Revenue Growth
    10% to 15%
    		Medium
    Margin
    Segment-I Margin
    7.5%
    		High
    Margin
    Segment-II Margin
    8.5%
    		High
    CAGR
    Room Air Conditioner CAGR
    19%
    		High
    CAGR
    Commercial Air Conditioning CAGR
    12% to 12.5%
    		High
    Growth Potential
    Commercial Refrigeration Growth
    30%
    		High
    R&D Spend
    R&D Investment as % of Revenue
    1.5% to 2%
    		High

    RAC Industry Growth and Blue Star's Performance

    Next quarter (Q1 FY26)
    CurrentIndustry degrew 15-20% in April; Blue Star grew 5% in primary sales
    TargetRecovery and growth in May/June, aligning with FY26 targets

    Why it matters

    RAC is a major segment, and April's performance was below expectations; recovery is crucial for achieving full-year targets.

    April, I understand, the industry would have degrown anywhere between 15% to 20%. In our case, as I can disclose this since the Board Meeting is over, we would have grown by around 5%.

    How to verify

    key_financials.segment_breakdown[name='Unitary Products'].metrics[label='Revenue']

    Risks & concerns

    8
    RiskSeverity

    Commercial Refrigeration Regulatory Changes

    Regulatory changes impacted the Commercial Refrigeration business in H1 FY25, though it has since recovered. — Management acknowledged

    medium

    E-Waste Extended Producer Responsibility (EPR) Cost Increase

    Increased EPR rates are being contested by companies, including Blue Star, with provisions made for the additional cost. — Management acknowledged

    medium

    Copper Duty and FTA-related Disputes

    Issues related to copper duty under FTA and localization, though Blue Star has made provisions and is sourcing locally. — Management acknowledged

    low

    Weather Volatility and Impact on RAC Demand

    Unpredictable weather patterns, including sporadic rains in April, led to industry degrowth and uncertainty for the summer season. — Management acknowledged

    high

    High Channel Inventory in RAC Segment

    Significant quantities of material were lifted in March, leading to higher-than-normal inventory in the market, contributing to April's degrowth. — Management acknowledged

    medium

    Geopolitical Developments and Supply Chain Disruptions

    Potential volatility in commodity prices and supply chain disruptions due to global geopolitical events. — Management acknowledged

    medium

    Uncertainty in International Exports Landscape

    Global trade policies (e.g., US-India, US-China deals) create uncertainty for export growth despite product approvals and inquiries. — Management acknowledged

    medium

    Cost of Market Penetration and Competition

    Penetrating Tier-3, 4, and 5 towns requires investments in brand, distribution, in-shop demonstrators, and consumer finance, leading to intense competition. — Management acknowledged

    medium

    Q&A highlights

    8

    “I am of the view that energy label change will not be an issue at all, for the simple reason, the production of those products would not have commenced and raw materials would have been ordered only for the summer season, finished good inventory when we will, in case the summer fails, I am still hopeful something will happen in May and June...”

    Addressed concerns about high channel inventory and potential pricing pressure due to a weak April and upcoming regulatory changes, with management expressing confidence in correction.

    asked by Natasha Jain

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY25

    Blue Star delivered a robust financial performance in FY25, with consolidated revenue from operations reaching Rs. 11,976.7 crores, marking a 23.6% year-on-year growth. The net profit before exceptional item📎s grew significantly by 38.6% to Rs. 772.4 crores. The company's EBITDA margin expanded by 40 basis points to 7.3% for the full year, reflecting improved operational efficiency and scale benefits. For Q4 FY25, revenue grew 20.8% to Rs. 4,018.96 crores, and PBT before exceptional item📎s increased by 16.2% to Rs. 248.82 crores.

    02

    Mixed Start to Summer Season and Revised FY26 Outlook

    The summer season began with challenges, as the industry experienced a 15-20% degrowth in April due to high channel inventory and sporadic rains. Despite an internal target of 25-30% growth for April, Blue Star managed a 5% growth in primary sales, attributing it to dealers stocking up on fears of compressor shortages. Consequently, the company revised its FY26 overall revenue growth outlook to 10-15%, with a potential to reach 20% under extremely favorable conditions, down from earlier expectations.

    03

    Segmental Performance and Market Share Gains

    The Electro-Mechanical Projects and Commercial Air Conditioning Systems segment grew 27.2% in FY25, with its segment result margin improving to 8.2%. The Unitary Products segment, which includes Room ACs and Commercial Refrigeration, saw 22.4% revenue growth in FY25, with its margin at 8.4%. The Room AC business achieved a significant milestone of 1.53 million units in sales volume for FY25, increasing its market share to close to 14%. The Professional Electronics and Industrial Systems segment, however, experienced a 7.7% de-growth in FY25.

    04

    Commercial Refrigeration Recovery and Market Leadership

    The Commercial Refrigeration business, which was impacted by regulatory changes in H1 FY25, showed signs of recovery and significant growth from April onwards. Blue Star holds strong market positions in this segment, with approximately 31% market share in deep freezers and 32% in modular cold rooms. The company anticipates a 30% growth potential for this segment, driven by the underpenetrated Indian market and rising demand from various sectors like quick commerce and healthcare.

    05

    Strategic Investments in R&D, Localization, and Distribution

    Blue Star continues its commitment to strategic investments, allocating 1.5-2% of its revenue to R&D for product development, cost efficiency, and sustainability, including VRF technology. The company is also focusing on localization efforts, having signed an MOU with Hindalco for local copper sourcing and exploring domestic manufacturing for critical components. Distribution expansion, particularly in Northern India, and investments in after-sales support are key priorities to capitalize on demand momentum.

    06

    Healthy Order Book and Strong Cash Position

    The company's carried forward order book grew 9.9% year-on-year to Rs. 6,263.4 crores as of March 31, 2025, providing strong revenue visibility. Order inflow for Q4 FY25 increased by 17.5% to Rs. 1,439.9 crores. Blue Star maintains a robust net cash position of Rs. 640.35 crores, an increase from Rs. 455.9 crores in the previous year, which supports its ongoing investments and growth initiatives.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.