Indian AC industry likely to double in value over next 4 years: Blue Star

The growth of India's AC industry would be from growing middle-class consumers with “high disposable incomes”, especially from smaller Tier III, IV & V markets.

The air-conditioning industry, valued at around ₹27,500 crore (USD 3.3 billion), is likely to double in the next four years, Blue Star has said in its annual report.

Air conditioners installed at a building near Jhandewalan, in New Delhi (Photo by Biplov Bhuyan/ Hindustan Times)

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

Why will India's AC industry grow?

This growth would be driven by factors such as “low penetration” of room ACs and the burgeoning middle-class consumers with “high disposable incomes”, especially from smaller Tier III, IV & V markets.

“The overall Indian AC industry (both residential and commercial), currently valued 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 for 2023-24.

The company is “optimistic” about its future business outlook, given the changing weather pattern, resulting in hotter summers coupled with a new and resilient product portfolio in residential and commercial air-conditioning.

Blue Star has rolled out a 3-year strategic plan to strengthen its core capabilities, acquire new capabilities, build new processes, and adapt innovative technologies, Advani added.

It also specifies details of investments to support these growth plans.

“In FY25, the Company will continue to focus on growing faster than the market, margin improvement initiatives through a comprehensive Total Cost Management programme, prudent management on financial capital, leadership development and succession planning,” it said.

The company expects its strong consumer insights of the domestic market coupled with its expertise, network of channel partners spread over 900 towns and a strong brand equity will place it in “good stead” to leverage the opportunities that the scale will bring in.

“This will necessitate substantial investments in sales and distribution, R&D, manufacturing, supply chain and digitalisation,” it said.

How did Blue Star perform financially?

Blue Star ended FY24 with a revenue growth of 21.4 per cent to ₹9,685.36 crores.

The company, which has completed 80 years, has improved its market share in the room air-conditioner (RAC) during the year, which is estimated to be at 13.75 per cent compared to 13.50 per cent in FY23.