Blue Star: Value of Indian air conditioning industry expected to double in next four years

The air conditioning industry with a value of around ₹27,500 crore (US$3.3 billion) is expected to double in the next four years, Blue Star said in its annual report.

The Indian HVAC&R (heating, ventilation, air conditioning and refrigeration) sector is poised for exponential growth, said Vir S. Advani, Chairman and Managing Director, Blue Star.

Why will India’s air conditioning industry grow?

This growth is expected to be driven by factors such as the “low penetration” of room air conditioners and the growing number of middle-class consumers with “high disposable incomes”, particularly from the smaller Tier III, IV and V markets.

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“The entire Indian air conditioning industry (both residential and commercial) is currently estimated at around ₹27,500 crore is likely to double in the next four years,” Advani said in his address to the company’s shareholders in the annual report 2023-24.

Given the changing weather conditions, which bring hotter summers, and a new and robust product portfolio in the area of ​​air conditioning for residential and commercial premises, the company is “optimistic” about its future business prospects.

Blue Star has presented a three-year strategic plan to strengthen its core competencies, acquire new skills, build new processes and adopt innovative technologies, Advani added.

It also provides details of the investments made to support these growth plans.

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“In fiscal 2025, the company will continue to focus on growing faster than the market, implementing margin improvement initiatives through a comprehensive total cost management program, prudent management of financial capital, leadership development and succession planning,” it said.

The company believes that its deep understanding of its home market consumers, combined with its domain expertise, network of distribution partners in over 900 cities and strong brand equity, will put it in a “good position” to capitalise on the opportunities presented by increasing scale.

“This will require significant investments in sales and distribution, research and development, manufacturing, supply chain and digitalization,” it said.

How has Blue Star performed financially?

Blue Star ended the 2024 financial year with revenue growth of 21.4 percent to ₹9,685.36 Crores.

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The 80-year-old company has increased its market share in the room air conditioning (RAC) segment during the year and is estimated to be at 13.75 percent compared to 13.50 percent in FY23.