NSE: BLUESTARCO
• Blue Star operates across 3 business segments: electromechanical projects (EMP) and commercial air conditioning systems, unitary cooling products (UCP), and electronics and industrial systems (EIS), contributing 62.8%, 33.7%, and 3.5% to its FY24 revenue, respectively. The company offers a broad product range, including central AC plants, packaged and ducted systems, VRF systems, and various room air conditioners. {2}
• In the refrigeration sector, Blue Star provides solutions like deep freezers, storage water coolers, modular cold rooms, and cold chain equipment. Its purification portfolio includes advanced water and air purifiers, while other products encompass air coolers and professional electronic equipment. {2}
• It continues to innovate with new offerings such as VRF Lite systems, centrifugal chillers, energy-efficient split ACs, and IoT-enabled cold room solutions. As part of its international expansion, the company is developing specialized products for the US and European markets, including heat pump units designed specifically for the US. {2}
Smartly Hedging and Sourcing Strategy for Raw Material in FY24:
• The company sources key components such as compressors, copper tubes, electronic parts, and inverter drives from vendors in China and other countries. 45-50% of raw materials are imported in FY24 {4} . It also has a current commodity forward contract worth ₹1.36 crore in FY24 to hedge price fluctuations in copper. This hedge covers 13.3% of the total copper usage exposure in FY24, with no hedging on aluminum or other raw materials.
Blue Star’s State-of-the-Art Plants and Sustainable Practices:
• Company has 7 manufacturing units in Ahmedabad, Himachal Pradesh, Dadra, and Sri City. The Sri City Plant, part of Blue Star Climatech Limited, began operations in January 2023 and produced 3,22,000 air-conditioners in FY24. It boasts eco-friendly initiatives with a 1.4 MW solar plant and the IGBC Gold Rating for sustainable building practices. {2}
• The Ahmedabad plant implemented BEE marking for deep freezers and achieved Level 4 in the CII total cost management (TCM) maturity assessment.
• The Wada plants, the largest manufacturing facility & produce a wide range of chillers, cold room panels, and deep freezers. In FY24, the plants achieved 100% indigenization of deep freezers range covering capacity models from 60L to 200L, with a ₹34 crore investment. Major infrastructure developments included a 2.1 MW solar power plant. A ₹45 crore plant expansion introduced advanced manufacturing systems. {2}
• The Himachal Pradesh plants successfully commissioned 6 fin lines for heat exchangers, enhancing peak capacity and reducing reliance on OEMs. The plants also introduced over 40 new models, including AI-enabled and -10°C hot and cold models, and have an annual capacity of 7 lakh finished units. {2}
• Dadra plant is known for producing high-quality air conditioning products such as packaged and ducted split ACs and VRF systems. In FY24, the plant completed two BIS surveillance audits and completed ten quality improvement projects.
Exhibit 1: 7 well-placed manufacturing units with vast distribution efficiency across northern, central, and southern India, giving export opportunities and geographic diversification.
Source: Investor Presentation Q3FY25
Empowering Sales Through Dealer Network:
• Dealers play a crucial role in driving sales of the company, it has 9 dealers which contributed 49.88% of total sales in FY24, marking a 5.2% increase compared to FY23. {2} Some of the dealers are Adam Exports Private Limited, Ilona Hospitalities Private Limited, Kc Exim Private Limited, Saim Air Private Limited, and more.
• The company has a huge network of 2,281 dealers and distributors, with the top 10 dealers accounting for 18.06% of total dealer sales in FY24. {2}
Exhibit 2: Extensive Pan-India Network with 1 corporate office, 4 regional headquarters, 28 sales and service offices, and 2 R&D centers.
Source: Annual report FY24, Pg-113
Company’s Offices, R&D Centers, and Manufacturing Facilities across India:
• The company operates a corporate office in Mumbai, with four regional headquarters located in Chennai, Mumbai, Kolkata, and Delhi. It has 28 sales and service offices spread across India and two R&D centers in Mumbai. Additionally, the company has seven manufacturing facilities situated in Sri City (Chennai), Dadra (Daman and Diu), Wada (Maharashtra), Ahmedabad (Gujarat), and Kala Amb (Himachal Pradesh). {2}
International business group and Revenue highlights:
• Company’s International Business Group has a global footprint contributing 6% in total revenue, exporting HVACR products and solutions to 18 countries across the Middle East, Africa, SAARC, and ASEAN regions. It also undertakes MEP (Mechanical, Electrical, and Plumbing) projects for residential, commercial, and infrastructure sectors through its joint ventures in Qatar and Malaysia. {2}
• In FY23, the company established wholly owned subsidiaries in the USA, Europe, and Japan to expand globally. In FY24, electro-mechanical projects and commercial air conditioners contributed 17.4% of revenue, with a 23.2% rise in segment results. In the MEA region, the unitary segment grew by 19%, and the applied segment by 23%. {2} The company aims for a 15% market share in the Room Air Conditioners segment by FY26. However, exports, contributing 6% of total turnover, faced challenges in certain Middle Eastern and African markets. {3}
• The company is focusing on expanding its product exports and investing in R&D to enhance its portfolio for these markets. Company has received a grant of ₹ 100 crores spread over 5 years by Mr Ashok M Advani, Chairman Emeritus & Promoter of Blue Star Limited, for the innovative center in Thane in FY23 {3}. Its subsidiaries in the USA and Europe are currently developing and launching energy-efficient and eco-friendly heating and cooling products, which are expected to drive growth in the coming years.
• It has also appointed new distributors in Oman, Sri Lanka, East Africa, Uganda, and Qatar for its applied business. Furthermore, it secured significant orders for room air conditioners in the recovering Saudi market. {2}
Revolutionizing After-Sales Service: Speed, Reach, and Excellence
• The after-sales service operation ensures the maintenance of approximately 2 million tonnes of air conditioning and refrigeration equipment, offering extensive coverage across Tier 2, Tier 3, and Tier 4 towns. Currently managing operations in over 3,900 towns with more than 2 million service calls annually {2}, the focus remains on providing same-day installation and call closure. The service is supported by a remote monitoring center located in Thane.
• Catering to diverse end-markets, the air conditioning services support sectors such as government (PSU), industrial, hospitals, automotive, infrastructure, and banking. Refrigeration services extend to industries including dairy, quick-service restaurants (QSRs), retail, pharma, and healthcare. {2}
• The digital infrastructure incorporates a customer care app, enabling seamless service requests with tracking and automated escalation for quick resolutions. Field service technicians benefit from a mobile-enabled system for breakdown and preventive maintenance updates, ensuring digital recordkeeping of all parameters. {2}
• Additionally, a robust knowledge management system, Star Vault , supports centralized storage and management of critical business documents and standard operating procedures (SOPs). {2}
25% Growth in E-commerce Sales with 10% Market Share in Online Channels {4}:
• The company has established strong partnerships with online distributors and is recognized as a preferred seller on platforms like Flipkart and Amazon. The company has also adopted direct seller and dropship models to enhance its online sales strategies, FY24 witnessed a robust 25% growth in online sales.
•Blue Star maintains a value market share of over 10% in online channels for its room air conditioners in FY24. Company also provides attractive special offers and promotions on online shopping portals to increase D2C presence.
Supporting MSMEs and Leveraging Subsidiaries for Growth {2} :
• The company engages with vendors identified as ‘Micro and Small Enterprises’, including Enviro Clinic Lab Private Limited, Cooltech Systems Private Limited, Fortune Metal Facades, and 14 other vendors. Purchases from related parties have risen to 10.34% of total purchases in FY24, compared to 3.04% in FY23.
• The company’s major business is driven by its 10 subsidiary companies and 2 joint ventures, from which it sources products. Additionally, it actively participates in the M1xchange TReDS platform to help its MSME vendors access funding at competitive rates.
Segment I (Electro-Mechanical Projects & Commercial Air Conditioning Systems) {2}
• Blue Star’s Electro-Mechanical projects and commercial air conditioning systems business contributed 62.8% in FY24 of the company’s revenue from operational projects like large central AC & ventilation projects, fire-fighting projects, water projects, plumbing projects, electrical projects and railway electrification.
• Commercial air conditioning offers a product portfolio that includes inverter split ACs, window ACs, portable ACs, and air coolers. Marking a 32.6% increase in the segment in FY24.
• A milestone in FY24 was the company’s entry into the semiconductor segment with an HVAC(Heating, Ventilation, and Air Conditioning) order for India’s largest semiconductor plant in Gujarat which Tata Group is developing in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). Demand for commercial air conditioning systems remained robust, especially in Tier 3 and 4 cities, driven by the popularity of ducted systems and VRF (Variable Refrigerant Flow) chillers.
• Company expanded its commercial cooling portfolio in FY24 with key advancements. It launched sixth-generation VRF systems featuring high-efficiency heat exchangers and compact designs. The company introduced enhanced ducted split and packaged ACs with 5% improved airflow.
• In chillers, it unveiled centrifugal chillers securing 33 orders, and brine chillers for pharma and process cooling, with plans to extend the range by FY25. Additionally, it developed a 3-star to 5-star chiller lineup in preparation for the July 2024 star labeling mandate.
• In the commercial air conditioning systems segment, the company maintained its leadership in ducted air conditioning with a 46% market share and scroll chillers with a 45% market share in FY24. It also ranked among the top three in VRF systems and chillers, holding a 21% market share in VRF systems and 24% in screw chillers.
• Key orders in FY24 were secured from clients like Tata Electronics (Hosur), Emmvee Energy (Bengaluru), Foxconn Hon Hai Technology (Bengaluru), Indian Oil Corporation (Panipat), and Shiv Nadar School (Noida), among others.
• Within its VRF (Variable Refrigerant Flow) systems, the indoor unit offerings include one-way cassette, high-wall, ductable, four-way cassette, and concealed split units. In contrast, outdoor units feature slide discharge, top discharge, and VRF Lite models.
• The company also provides a range of ducted and packaged systems, such as air-cooled ducted split indoor and outdoor units, water-cooled mini-series indoor and outdoor units, floor-mounted packaged indoor units, inverter packaged outdoor units, centrifugal chillers, brine chillers, water-cooled inverter scroll chillers, and data center chillers.
Exhibit 5: Products under VRF system and Ducted AC and packaged systems.
SEGMENT II (Unitary Products) {2}
The unitary products range also encompasses water purifiers, air purifiers, and air coolers. Contributing 33.7% in company’s revenue in FY24.
Room ACs
• Company outperformed the industry YOY growth rate of 20%, achieving a 21.5% revenue increase in FY24 and boosting its market share to 13.75%. The cooling and purification appliances segment is now available in approximately 9,500 outlets across India, with segment revenue rising by 5.1% in Q2FY25. The company introduced over 100 new models of air conditioners, including inverters, fixed-speed, and window ACs, covering various price points to address diverse consumer needs. {2}
• In FY24, the company expanded its AC portfolio with a range of innovative products across various categories. In the inverter split AC segment, three new ranges were launched: flagship, premium, and affordable models, available in 2-star, 3-star, and 5-star variants, with prices starting at ₹29,990. {2}
• These models come with customer-centric features, including the ‘AI Pro’ function, ‘Turbo Cool’ for rapid cooling, and the ‘Convertible 6-in-1’ function for added flexibility. Additionally, the company introduced Super Energy-Efficient ACs with a 6.25 ISEER(Indian Seasonal Energy Efficiency Ratio) rating, Heavy-Duty ACs for extreme cooling, Smart Wi-Fi ACs with voice control, and Hot & Cold ACs for sub-zero temperatures. In the light commercial segment, new offerings such as mega split, Verticool (Tower), and cassette ACs with R32 refrigerant were launched, all meeting BEE(Bureau of Energy Efficiency) and BIS (Bureau of Indian Standards) QCO(Quality Control Order) standards.
• The company’s range of top-of-the-line ‘Heavy-Duty ACs’ designed with superior specifications , and can deliver faster cooling and comfort even at 56°C. These ACs also come with a powerful air throw of up to 55 feet and deliver 100% cooling capacity at even 43°C. The company targets to achieve a market share of 15% by FY26 in the Room Air Conditioners segment.
Exhibit 6: Company launched new range of smart, premium, turbo, and efficient range of AC in FY24.
Air Coolers & Purifiers
• The company also launched a new range of air coolers with a unique cross drift technology and dual cool technology that help in faster cooling during harsh and dry summers. The range comes with different water tank capacities, from 10 litres to 140 litres and cooling efficiency. During FY24, the company added distributors to make deeper inroads into this category.
Exhibit 7: Innovative products for cooler, cleaner, and healthier living.
Commercial Refrigeration
• In commercial refrigeration company offers multiple categories in FY24, including merchandising solutions like deep freezers, storage water coolers, visi coolers, and bottled water dispensers, as well as commercial kitchen, healthcare, and cold storage refrigeration. It secured orders from prominent clients such as Havmor, Hocco, Vadilal, Amul, Mother Dairy, Dinshaw’s, and Baskin Robbins. The Wada manufacturing plant for deep freezers is now operating at full capacity to meet the increasing market demand.
• In FY24, the company achieved 100% Domestic production of deep freezers under the ‘Make in India’ initiative, expanding production at its Wada Plant to include 60L–600L models, available in 3-star, 4-star, and 5-star variants, all of which earned the India Design Mark {2} . It also introduced advanced technologies like Vapour Injection for cold rooms, semi-hermetic condensing units, IoT-enabled monitoring, and electronic expansion valve systems to optimize refrigerant flow and enhance compressor protection.
• However, the commercial refrigeration segment faced temporary challenges due to regulatory changes by BIS in September FY24 that affected water cooler specifications {3}.
Exhibit 8: From farm to pharma: expanding commercial refrigeration for every sector.
• Notably, the company secured substantial cold room orders from industry giants such as Snowman; DHL; Delhivery; Bharat Biotech; Coke; Intas Pharma; and Zomato in FY24, marking its foray into the large cold storage business space. {2}
• Company became the first Indian company to receive an India Design Mark for its 300-600 litres deep freezers and also obtained BIS certification for the full range.It has maintained its market leadership in deep freezers, storage water coolers and modular cold rooms.
SEGMENT III (Professional and industrial structure) {2}
• This business segment is overseen by Blue Star Engineering & Electronics Limited, the Company’s wholly-owned subsidiary, this subsidiary operates a medical diagnostic equipment refurbishment facility in Bhiwandi, Maharashtra, dedicated to refurbishing a diverse range of pre-owned medical diagnostic imaging systems.
• Company has established two customer experience centres: one in Thane for its non-destructive testing solutions and another in Chennai for material testing and metrology solutions.
• The PEIS business operates in three broad segments: MedTech solutions(MRI machines, CT scan machines); Data security solutions; and Industrial solutions, which encompasses material testing; Non-destructive testing (NDT); Metrology; Warehouse automation; and Electronics assembly and testing solutions contributing 3.5% of the total revenue in FY24.
• In this segment, business relies heavily on imported hi-tech capital equipment. Supply chain constraints and uncertainties have caused significant delays in order finalization and execution which has impacted revenue and margins in the segment.
• The Company continues to make investments in R&D in FY24, the company invested 143 crores which includes capital expenditure of 94 crores on contemporary design and test facilities. A new centre was established at Bhiwandi near Mumbai for the design and development of heat pumps and VRF. It now have 4 state-of-the-art R&D centres at Thane, Wada, Dadra, and Bhiwandi. In FY24. {2}
Exhibit 9: Segmented revenue dominated by Electro-Mechanical & Commercial AC at 63% in FY24.
Source: Tijori Finance
Virat Kohli as Brand Ambassador: Driving Aspirations Across Emerging Markets:
• Having Virat Kohli as the brand ambassador for the company’s RAC has significantly enhanced its visibility in Hindi-speaking regions and Tier 3, 4, and 5 towns, particularly among younger consumers. The company’s TV commercials, along with its digital and outdoor campaigns, have been designed and simplified to appeal to a broader audience, including the aspirational middle class.
Exhibit 10: Virat Kohli as a brand ambassador of Blue Star- Nobody cools better with.
94% Surge in R&D Investment for FY24 Fueled by Chairman’s 100 Crore Grant to Strengthen Air Conditioning and Refrigeration Innovation:
• In the year 2022-23, as part of an extraordinary initiative, Ashok M Advani, chairman Emeritus & promoter of the Company, committed a personal grant of 100 crores, to be disbursed over five years. {2}
• The Company has allocated these funds as follows: 7.48 crores towards the building, 39.28 crores for plant and equipment, 43.07 crores for technical know-how, and the remaining amount for other purposes {2} . This grant is designed to significantly boost and sustain investments in the research and development of the company’s air conditioning and refrigeration products.
• For FY24, the company incurred a total of 143.47 crores on research and development activities, a notable increase from 73.89 crores in FY23, an increase of 94%, and continues investment in manufacturing capacity, R&D, and digitalization initiatives. {4}
Subsidiaries and joint venture companies play a vital role as key suppliers, driving collaboration and growth {2}.
Subsidiary Companies:
Blue Star Engineering & Electronics Limited
Blue Star Engineering & Electronics Limited, a material subsidiary of Blue Star, reported a revenue increase to ₹381.14 crores in FY24, up from ₹349.92 crores in FY23, with net profit rising to ₹46.37 crores from ₹40.27 crores. The company specializes in advanced technology products and turnkey solutions for BFSI, healthcare, and industrial sectors.
Blue Star Climatech Limited
Blue Star Climatech Limited, a wholly owned subsidiary, manufactures cooling products and operates a state-of-the-art, sustainable facility in Sri City. In FY24, it achieved ₹718.75 crores in revenue, up from ₹139.38 crores in FY23, and a net profit of ₹22.72 crores, recovering from a ₹6.87 crores loss last year.
Blue Star International FZCO
Blue Star International FZCO, based in Dubai, is responsible for expanding Blue Star’s global product sales in the Middle East and Africa, with a focus on air conditioning, commercial refrigeration, and OEM/ODM exports. In FY24, the subsidiary reported consolidated revenue of ₹386.12 crores, a slight decrease from ₹386.78 crores in FY23. However, net profit saw a significant increase, rising to ₹10.27 crores from ₹4.75 crores in the previous year.
Blue Star Systems and Solutions LLC
The wholly owned subsidiary of Blue Star International FZCO, operating in the UAE, recorded a decline in revenue from ₹47.52 crores to ₹30.06 crores for the year ending March 31, 2024. The net loss improved from ₹7.69 crores in the previous year to ₹5.06 crores in FY24.
BSL AC&R (Singapore) Pte Ltd
Incorporated on August 29, 2020, in Singapore, this company is a wholly owned subsidiary of Blue Star International FZCO. It is involved in selling central air conditioning equipment, executing mid-sized HVAC projects, and offering after-sales services. The company also holds a 49% stake in the joint venture, Blue Star M&E Engineering Sdn Bhd. For the year ending March 31, 2024, its revenue increased to ₹4.10 crores from ₹2.50 crores in the previous year. The company posted a net profit of ₹0.15 crores, up from ₹0.07 crores in FY23.
Blue Star North America Inc
Blue Star North America Inc, a wholly owned subsidiary of Blue Star, was incorporated on September 22, 2022, in Delaware. It is engaged in the sale and service of air conditioning, heating, and refrigeration equipment across the United States, Canada, and Latin America. For the year ending March 31, 2024, the company’s revenue from operations was ₹19.45 crores, while it incurred a net loss of ₹5.51 crores
Blue Star Europe B.V.
Blue Star Europe B.V., a wholly owned subsidiary established on November 28, 2022, is involved in the sale and service of air conditioning, heating, and refrigeration equipment in Europe. For its first financial period ending March 31, 2024, the company reported no revenue and incurred a net loss of ₹10.12 crores.
Blue Star Innovation Japan LLC
Blue Star Innovation Japan LLC, incorporated on February 10, 2023, as a wholly owned subsidiary, focuses on R&D for refrigeration cycles, control algorithms, and boards for air conditioners and chillers. The R&D center aims to accelerate technology and product development, promoting energy efficiency and ozone-friendly solutions to support decarbonization. For the year ending March 31, 2024, the company generated no revenue and incurred a net loss of ₹2.92 crores.
Blue Star Air Conditioning & Refrigeration (U) Limited
In June 2023, Blue Star International FZCO, a wholly owned subsidiary of the company, established Blue Star Air Conditioning & Refrigeration (U) Limited in Uganda. The company is set up for manufacturing, selling, and distributing air conditioning and commercial refrigeration products, as well as fabricating and repairing air conditioning systems. Business operations have not yet commenced.
Blue Star Qatar WLL
Blue Star Qatar WLL, a joint venture with Blue Star holding 49% and focused on MEP contracting and maintenance in Qatar, saw its revenue drop from ₹148.73 crores to ₹121.35 crores in FY24. It reported a net loss of ₹12.78 crores, compared to a net profit of ₹4.57 crores in the previous year.
Joint venture:
Blue Star M & E Engineering Sdn Bhd
Blue Star M & E Engineering Sdn Bhd, a joint venture between Blue star AC &R (Singapore) Pte Ltd and Amcorp Properties Bhd, specializes in HVAC contracting and maintenance in Malaysia. For the year ending March 31, 2024, the company reported a total income of ₹83.31 crores and a net profit of ₹1.23 crores, up from ₹46.07 crores and ₹0.83 crores, respectively, in the previous year.
Blue Star Oman Electro-Mechanical Company LLC
Blue Star is in the process of exiting the joint venture in Oman following disputes and awaiting RBI approval to write off its investment. Company holds 51% of the share capital of Blue Star Oman Electro-Mechanical Co. LLC, however, the profit sharing is on 50-50 basis and it is treated as a joint venture under Ind AS 110. An arbitration claim of ₹223.60 crores has been filed, which Blue Star is contesting.