NSE: BLUESTARCO
Strengths
• The company has established a strong market presence across various segments, including EMP(Electro-Mechanical Projects) and commercial ACs, and is the market leader in commercial refrigeration in Uttar Pradesh. Its market share in the room air-conditioning segment grew from 10% in FY16 to 13.75% in FY24, driven by a robust distribution network of over 4,100 channel partners and 8,800 outlets nationwide. The company’s extensive network spans tier 1, tier 2, and tier 3 cities in India and extends internationally to 18 countries across the Middle East, Africa, SAARC, and ASEAN regions. {1}
• The company operates seven well-placed manufacturing units in HP, Dadra, Ahmedabad, Wada, and Sri City. These locations enhance distribution efficiency across northern, central, and southern India. Sri City’s proximity to ports supports export opportunities, while geographic diversification lowers transportation costs and boosts profit margins. {1}
Opportunities
• The residential construction sector is growing at a CAGR of 7.51% {16} , boosting demand for home appliances like Room Air Conditioners (RAC). The under-penetrated RAC market shows significant potential, with its value rising at a CAGR of 11.2% between FY 2017-18 and FY 2022-23, projected to grow further at 12% CAGR from FY 2022-23 to FY 2028-29 {17} . This growth is driven by urbanization, improved access to consumer financing, and rising disposable incomes, encouraging wider adoption and market expansion.
• Rising temperatures drive strong growth in the RAC market, projected at 12% CAGR {5} Rising temperatures are significantly boosting demand for cooling solutions, creating substantial growth opportunities for the company in the Room Air Conditioner (RAC) market. Over the past five years, the Indian RAC market has grown at a robust CAGR of 11.2%, and this growth is projected to accelerate to 12% CAGR in the coming years.
Threats
• Economic volatility and business outcomes: The company’s performance is heavily influenced by economic conditions in India, with erratic weather patterns in the early months impacting air conditioner demand and leading to a prolonged end-of-season period and excess inventory liquidation.
• Geopolitical tensions and supply chain disruptions slow global GDP to 2.9%, while copper prices rise from $3.21/Lbs in 2020 to $5.03/Lbs in April 2024: The company is grappling with challenges such as geopolitical tensions and supply chain disruptions. The global economic growth in CY 2023 has been constrained by these issues, with global GDP growth estimated to have slowed to 2.9%. Raw materials used by the company like steel, plastic, Iron, and copper have fluctuating prices like copper in 2020 was 3.2083(USD/Lbs) and 5.0265(USD/Lbs) in April 2024. {18}