Why We Prefer Blue Star Over Other Listed Room AC Peers: Nirmal Bang

Nirmal Bang Report

Havells India Ltd. registered a moderate topline growth of 12.0% YoY versus 26.8% YoY for Blue Star Ltd. versus 42.1% YoY for Voltas Ltd.

Havells’ moderate topline growth was due to lower-than-expected growth in Lloyd (~25% of total revenue) at 5.9% YoY. Lloyd’ Ebit margin improved to 2.7% in Q4 FY24 versus -1.8% YoY

Voltas’ UCP (~70% of total revenue) grew by 44.2% YoY. ~75% of UCP revenue comes from RAC – company sold 2 million plus units of RAC in FY24. UCP’s Ebit margin declined by 89 bps YoY to 9.2% in Q4 FY24. However, RAC’s Ebit margin improved by ~100 bps QoQ to ~10%.

Blue Stars’ UCP (~50% of total revenue) grew by 34.8% YoY. ~70% of UCP revenue comes from RAC – company sold one million plus units in FY24. UCP’s Ebit margin declined by 16 bps YoY to 8.3% in Q4 FY24. However, Blue Star gained market share in RAC from 13.5% in FY23 to 13.75% in FY24.

We remain positive about the long term RAC prospects for Blue Star. But, we remain cautious on Voltas for 12-18 months. We also remain cautious in terms of the sustainability of Lloyd’s margins over the medium term.

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