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business | IST

Blue Star sees demand growth despite price hikes, expects 1% impact on margin

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According to Blue Star, the first-time buyers are enormous. So, there is growth despite the price increase seen in January, then again in April and September.

Channel checks on wide good players by Nirmal Bang suggest that while September has been muted, there is an uptick in the B2B demand. The firms also expect limited price hikes and a positive festive season.
B Thiagarajan, MD, Blue Star said September was much better than last year for room air conditioners and is at a pre-pandemic level.
Talking about demand, he said the summer season was impacted because of the second COVID-19 wave and it is going to be very difficult to make up for it in Q2 and Q3. He, however, said, that right from July demand has been much better than what the industry anticipated because perhaps, people are upgrading their homes and are spending more time in their houses. Therefore, demand has been very robust, he said, adding that in line with this the festival season is also expected to be an excellent one.
“In Q1 FY21, we were at the 35 percent of the pre-pandemic level as far as room air conditioners are concerned, while it was close to 50 percent level in Q1 of this financial year. We have already reached the pre-pandemic levels and going forward, we have to look at how we will grow over FY19,” said B Thiagarajan.
On price increases, he said, he said there was a hike of about 3-5 percent in September and the average could be taken as 4 percent.
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He further stated that first-time buyers are enormous, which is instigated by around 50 percent of the buyers buying through consumer finance schemes. So, there is growth despite the price increase seen in January, then again in April and September.
When asked if with the price hike margins are adequately protected or raw material inflation impacts would have to be absorbed, Thiagarajan said, “In the last conversation, I had indicated that we won't look at it a month on month. On a full-year basis, my projection is that the margins will be down by around 1 percent but then it is compensated by the operating costs as well. So, the overall EBIT or PBT should not be impacted. I am hoping that there won't be an additional hike on the commodities going forward, the freight and the commodities will stay stable is my assumption in stating so.”
For the full interview, watch the accompanying video