Blue Star , a leading air conditioning and commercial refrigeration company, has reported strong financial results for the third quarter ended December 31, 2022, with significant growth in both revenue and profit.

Financial Highlights

• Consolidated revenue increased by 18.72% to Rs 1,788.20 crore
• Net profit rose by 22.79% to Rs 58.41 crore
• Order book reached a record Rs 4,861.99 crore, up 47.27% year-on-year

Quarterly Performance

Blue Star's consolidated revenue for Q3 FY2023 stood at Rs 1,788.20 crore, marking a substantial increase of 18.72% compared to Rs 1,506.22 crore in the same quarter of the previous year. The company's net profit saw an impressive growth of 22.79%, reaching Rs 58.41 crore, up from Rs 47.57 crore in Q3 FY2022.

Segment-wise Performance

All three business segments of Blue Star showed growth during the quarter:

Nine-Month Performance

For the nine months ended December 31, 2022, Blue Star reported:

• Revenue growth of 40.46% to Rs 5,334.76 crore
• Net profit of Rs 175.40 crore, surpassing the full-year profit of Rs 168.00 crore for FY22

Record Order Book

The company's carried forward order book reached a record high of Rs 4,861.99 crore as of December 31, 2022, representing a significant growth of 47.27% compared to Rs 3,301.33 crore on December 31, 2021.

Change in Depreciation Method

Blue Star implemented a change in its depreciation method from Written Down Value to Straight Line Method, effective October 1, 2022. This change resulted in lower depreciation charges of Rs 10.80 crore for the quarter.

Conclusion

Blue Star's strong performance across all business segments, coupled with its record order book, indicates robust growth and market demand for its products and services. The company's ability to surpass its previous year's full-year profit in just nine months of the current fiscal year demonstrates its strong financial position and operational efficiency.

Blue Star Limited , a leading air conditioning and commercial refrigeration company, is bracing for a significant short-term impact on its sales due to anticipated GST reforms. B Thiagarajan, Managing Director of Blue Star, has warned that air conditioner sales could decline by up to 50% in the near term as consumers delay their purchases in anticipation of proposed tax changes.

GST Reform Expectations

The Indian government is expected to implement a new two-slab GST structure, reducing the tax on air conditioners from the current 28% to 18%. This reform, announced by Prime Minister Narendra Modi during his Independence Day speech, is likely to be rolled out by October, coinciding with the Diwali festival season.

Short-Term Sales Impact

Thiagarajan highlighted that August sales are expected to be severely affected as customers postpone their purchases to benefit from the lower tax rates. He emphasized the importance of early notification of the new rates, ideally before September 1, to minimize the industry's challenges during the festive season, which includes Ganesh Chaturthi, Navratri, and Diwali.

Consumer Behavior and Industry Response

While B2B customers may continue their purchases due to input tax credit benefits, individual consumers are likely to delay their buying decisions. In response to this trend, dealers are expected to focus on taking bookings rather than immediate sales.

Long-Term Growth Outlook

Despite the short-term challenges, Thiagarajan remains optimistic about the industry's future. He projects that the AC industry could achieve 15-20% growth for the fiscal year 2026 once the GST reforms are implemented.

Industry Implications

The anticipated sales decline highlights the significant impact that policy changes can have on consumer behavior and industry performance. While the proposed GST reduction is expected to benefit consumers in the long run, it poses immediate challenges for manufacturers and retailers in the AC industry.

As the industry navigates this transitional period, companies like Blue Star will need to adapt their strategies to manage inventory, maintain customer relationships, and prepare for the expected surge in demand once the new tax rates are implemented.