Expect 25-30% YoY Growth This Summer Season: Blue Star | CNBC TV18

Summary

Mr. V. Thyagarajan, Managing Director of Blue Star, discusses the company's strong growth outlook, driven by high demand for air conditioners amid rising temperatures. Despite a strong sales base last year, Blue Star anticipates a 25-30% growth this summer. The company has implemented a 3-4% price hike due to increased raw material costs and targets an 8-8.5% margin in the AC segment. Blue Star is focusing on expanding its production capacity to 1.75 million units for the next financial year. Additionally, consumer finance schemes and rising advertising costs, like IPL sponsorships, are influencing business strategies.

Takeaways

• 😀 The stock market is currently doing well, with Nifty up by nearly 1% and the midcap index up by 1.5%.
• 😀 Despite the positive market trends, the temperatures are soaring, with heat waves hitting different parts of India, including Mumbai.
• 😀 Blue Star, an air conditioner manufacturer, is seeing strong demand with expectations of significant growth for the summer season.
• 😀 Blue Star's managing director, Mr. V. Thyagarajan, expects a 25-30% growth in sales during the summer, despite last year's exceptional performance.
• 😀 The company had a solid start to the quarter with high momentum from the festival season, and they are seeing good inventory stocking for the summer.
• 😀 Blue Star took a 3-4% price hike in February to compensate for rising raw material prices, but is maintaining its market share and margin goals.
• 😀 The company aims to maintain a margin of 8-8.5% in its AC segment while targeting a market share of 13.75%-14.25% next year.
• 😀 Despite intense competition and expanded manufacturing capacity, Blue Star remains focused on market share growth rather than just price hikes.
• 😀 Approximately 40% of Blue Star's sales are through 0% interest financing schemes, which could impact profit margins.
• 😀 There are additional costs for Blue Star, such as extended producer responsibility, media costs, and rising costs like IPL advertising, all affecting overall margins.

Q & A

What is the current state of the market as discussed in the transcript?

The market is performing well, with the Nifty index up almost 1% and the midcap index showing a growth of around 1.5%. There's a positive sentiment in the market, with many stocks doing well.

What is the current heat wave situation in India mentioned in the transcript?

The heat wave is affecting various parts of India, with soaring temperatures in the north and a particularly hot climate in Mumbai. Despite the heat, the market is thriving.

What is Blue Star's growth forecast for the summer season?

Blue Star is expecting a growth rate of 25-30% for the summer season, despite having an exceptionally high growth base from the previous year.

How does Blue Star plan to meet the demand for air conditioners this season?

The company has planned ahead by stocking up inventories and receiving a lot of positive sentiment from consumer demand, which is driven by high temperatures and consumer finance schemes.

What is the percentage price hike that Blue Star implemented in February?

Blue Star implemented a price hike of 3-4% in February to account for increases in raw material costs.

What is Blue Star's target margin for the air conditioning segment?

Blue Star's target margin in the air conditioning segment is 8-8.5%, which they aim to maintain.

How much of Blue Star's sales are expected to be made through financing schemes?

Blue Star expects around 40% of its sales to be made through 0% interest finance schemes for consumers.

What is Blue Star's capacity utilization and production target for the next financial year?

Blue Star's production capacity includes 6.5 lakh units from Himachal Pradesh and 8.25 lakh units from the City factory, with a target to cross 1.75 million units in total for the next year.

What are some of the challenges Blue Star is facing in the market?

Blue Star is facing intense competition in the air conditioning market as manufacturing capacity has more than doubled, and various players are trying to maintain or grow their market share.

What are some additional cost factors affecting Blue Star's operations?

In addition to raw material price hikes, Blue Star is also impacted by rising media costs, such as advertising expenses for the IPL, and consumer finance costs, which can affect the overall margin.