Blue Star says no room for further AC price hike

Blue Star has been increasing room air-conditioners’ prices for the past 24 months as raw material prices have escalated due to supply issues because of the China COVID-19 situation as well as the Russia-Ukraine war.  Therefore, the company has no plans to increase prices further, as per B Thiagarajan, Managing Director of the company, in the near future.

“The price increase had been there for the past 24 months. We have been increasing the prices and there is no room for increasing the prices further,” he told CNBC-TV18.

The company will look at the prices once the current quarter is over. For the summer season, a new range of products will be introduced

“These (new launches) will be in-line with our strategies – affordable premium range. We will go ahead and ensure that the products are optimized for various markets and segments. Therefore there is no question of a price increase from January 1,” the CEO explained.

The easing in commodity prices should also improve the margins in the second half of the current financial year. However, the rupee depreciation is offsetting the savings that have been achieved in the commodity prices.

“We continue to maintain the margins throughout the year. Despite the commodity prices escalation, the business segments are showing improved margins,” Thiagarajan mentioned.

Channel checks by several brokerages indicate consumption has been declining to post the festive period owing to the overall inflationary environment. Checks also exhibit that a large part of the pain is being seen in the smaller cities.

While giving a ground check on how the demand is looking, the CEO said, “I do not see the slowdown in the segments that we operate. Take the room air-conditioners – given that the penetration is lower, the segment continues to do well.”

The demand holds and it will continue to build up to the summer season despite the energy level change which normally pushes up the prices.

More than 67 of the company’s sales comes from tier III, tier IV and tier V cities. “Due to the good agricultural income, we are beginning to see a surge in demand in the rural towns as well,” he said.

The stock was up 1.25 percent in the last week and down 1.35 percent in the past month.

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