Blue Star To Hike AC Prices By 4-5% In April As Commodity Costs Pinch

Blue Star Ltd. plans to hike prices of its air conditioners by 4-5% in April owing to volatility in metal prices and foreign exchange rates, its Managing Director B. Thiagarajan said on Thursday. This marks the second price increase this year, following a 3-4% hike in February.

"There is real pain regarding prices of copper and steel amid the ongoing trade war and a volatile financial market," he told NDTV Profit. "You also have exchange rate fluctuations and Indian rupee is weakening, so we have to increase our prices in order to protect our margins and maintain market share... After all, we can only absorb these costs to an extent."

Blue Star expects to sell 15 lakh units of ACs this year — a 50% growth over previous year — driven by robust summer season demand, rising disposable income and easy access to finance schemes.

Thiagarajan also revised its market share guidance, stating that Blue Star aims for a room AC market share of 14.3% in fiscal 2026, up from 13.9% now, and 15% by the end of fiscal 2027. Earlier it had projected to reach 15% by the fiscal ending March 2025. "To reach 15% share, we need to have a stronger hold in north India, and we are consistently expanding our distribution network to reach our goal."

On Thursday, Blue Star launched 150 models of room ACs, including 40 equipped with smart features. It expects sales of smart ACs to reach one lakh units this fiscal, a jump from just 2,000 units sold a year ago. The company has also reduced the price gap between its regular ACs and smart ACs to around Rs 1,000. By 2025-26, Thiagarajan expects smart AC sales to rise to five lakh units, accounting for nearly 30% of total sales.

For fiscal 2026, the company has lined up investments of Rs 310 crore. "We will be investing around Rs 200 crore to increase its production capacity at the Sri City plant, another Rs 60 crore towards research & development and another Rs 50 crore will be spent on ads during summer," he said.

The Blue Star MD also reiterated that the industry is likely to face a supply shortage even as the government has provided some relief by exempting imports of copper tubes and compressors from mandatory BIS certification. "The Chinese manufacturers have been diverting most of their shipments to the US to avoid potential tariffs, and as a result the supplies of compressors have become scarce compared to demand."

However, by 2028, the country is expected to become self-reliant in compressor manufacturing, thanks to the government's production-linked incentive scheme, he said. As for copper tubes, local capacities have come up and it should be able to meet demand within 12 months, according to Thiagarajan.

"With India set to add approximately 450 million middle-class consumers by 2030, the market for room ACs is at its inflection point and is poised to grow exponentially over the next few years," according to Thiagarajan. To cater to this growing demand, he said that the company plans to expand its production capacity to 18 lakh units by fiscal 2027 from 14 lakh units currently.