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Informist, Thursday, Dec. 19, 2024

 

By Rajesh Gajra

 

NEW DELHI – The professional electronics and industrial systems segment of Blue Star Ltd. will see a pickup in sales only in Jan-Mar, the company's managing director, B. Thiagarajan, told Informist in an exclusive interaction on the sidelines of an event in Delhi Thursday. Revenue from the segment declined 3.8% on year to INR 805 million in the quarter ended September, and the earnings before interest and tax fell sharply by 58% to INR 52 million during the quarter.

 

Thiagarajan said the weakness was due to the General Election in Apr-May this year, with the government's capex cycle being deferred. There was an issue of low sales with quite a few of the company's customers in the segment who are involved in testing, measurement, digital gateways, and other activities, the managing director said. As the company expects a revival in revenue from the segment only in Jan-Mar, the weakness seen in Jul-Sept is likely to sustain in the December quarter as well.

 

The professional electronics and industrial systems segment is, however, "not a make-or-break segment for Blue Star", Thiagarajan said. In this segment, the company provides solutions and system integration in data security, industrial solutions, and med-tech, with key customers being from the automotive, aerospace, banking, financial services and insurance, healthcare, and steel sectors. This segment contributed 3.9% to the total revenue and 6.8% to the total EBIT in 2023-24 (Apr-Mar). In Apr-Sept, the professional electronics and industrial systems segment contributed 3.5% to the revenue and 3.3% to the EBIT.

 

During the post-September quarter earnings conference call with analysts, Blue Star's management had said that the professional electronics and industrial systems business was largely dependent on the import of hi-tech capital equipment by its customers and demand was subdued. Further, supply chain restrictions and uncertainties resulted in long delays in finalisation and execution of orders, according to the company.

 

Blue Star categorises its operations into three segments -- electro-mechanical projects and commercial conditioning systems, unitary products, and professional electronics and industrial systems. The unitary products segment comprises room air-conditioners, air coolers, air purifiers, water purifiers, and commercial refrigeration products and systems.

 

In the quarter ended September, the electro-mechanical projects and commercial conditioning systems segment saw revenue jump 33% on year to INR 14.28 billion, and EBIT rose substantially by 83% to INR 1.19 billion. The unitary products segment recorded revenue growth of just 5.1% at INR 7.67 billion, but EBIT fell 12.5% to INR 540 million.

 

Thiagarajan said the festival season in the current quarter was extremely good for sales of air conditioners, which saw 30% growth. This, according to him, is contrary to what some brokerage reports have said about overall consumer durables being weak in the current quarter's festival season. In the case of air conditioners, growth was strong, he said.

 

On Thursday, shares of Blue Star ended 0.3% higher at INR 2,043.90 on the National Stock Exchange.  End

 

Edited by Avishek Dutta

 

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