Blue Star hopes to be a billion-dollar company (Rs 8,000 crore plus revenue) by the end of the ongoing fiscal driven by improving demand and capacity expansion even as margins remain under pressure because of currency volatility.
The company reported Rs 5,335-crore revenue for the nine months ended December 31, 2022, growing 40 per cent year on year.
“Going by the Q3 results, there is a possibility that Blue Star will be a billion-dollar company when we end the year. We have been outperforming for the past five quarters. So, it is very much likely that we will achieve this,” said B. Thiagarajan, managing director, Blue Star.
The air conditioner and commercial refrigeration major announced a foray into the affordable segment last week at Sri City and has set a target of achieving a 15 per cent market share by FY25.
The domestic industry was estimated at 6 million units in FY22 and Blue Star’s market share was 13.3 per cent. The industry is expected to reach a milestone of 10 million units in FY24.
The company also plans to expand capacity at its plant in Sri City in Andhra Pradesh. Around Rs 350 crore has already been invested and the company has earmarked a total of Rs 550 crore investment in the plant in phases over the next few years. The plant will benefit from the production-linked incentive applicable to the sector.
The company is also looking to acquire additional 40 acres for setting up commercial refrigeration unit and will build capacity to factor in export needs as well.
“The only concern has been the margin pressure. We thought that the commodity prices softening will help us to improve the margins but the rupee depreciation is eating into the savings arising out of that. The good news is scale is getting big, so there is operating leverage that is happening,” he said.
The PLI scheme is expected to result in intense competition among AC manufacturers with most companies looking to expand capacity. Sri City is emerging as a major manufacturing hub for the sector.
Blue Star has also expanded its footprint overseas opening offices in Europe and US. Thiagarajan said the results in those markets are expected to show from next year onwards.
