Blue Star Limited delivered a mixed performance in the second quarter of FY2024, with profitability growth slowing significantly amid challenging market conditions for room air conditioners.
Financial Performance Highlights
The renowned air conditioning and commercial refrigeration major posted a net profit of ₹99 crore for the July-September quarter, reflecting a modest 3% year-on-year increase. This comes despite a healthy 15% revenue growth, with total income reaching ₹2,334 crore compared to ₹2,019 crore in the same period last year.
Segment-Wise Performance Analysis
Electro-Mechanical Projects and Packaged Air Conditioning Systems emerged as the star performer, registering impressive growth. However, this was partially offset by weakness in the unitary products business, particularly in room air conditioners, which faced demand headwinds.
Operational Metrics and Margins
The company's earnings before interest, taxes, depreciation and amortization (EBITDA) showed resilience, increasing by 11% to ₹146 crore. The EBITDA margin stood at 6.3%, though this represented a slight contraction from 6.5% in the corresponding quarter of the previous fiscal year.
Management Commentary and Outlook
Blue Star management acknowledged the challenging environment for room AC sales but expressed confidence in the company's diversified business model. The strong performance in project business and packed AC systems has helped cushion the impact of sluggish consumer demand in the unitary products segment.
Market Reaction and Investor Sentiment
Investors have been closely monitoring Blue Star's performance as an indicator of consumer durable demand and the broader HVAC sector's health in India. The tempered profit growth despite decent revenue expansion suggests margin pressures and shifting demand patterns across different product categories.
