Blue Star Limited — Q2 FY26

Blue Star Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=uphaXgnx5r0 Published: 6 months ago

0:01 1 second Ladies and gentlemen, good morning and welcome to the Blueest Star Limited Q2 and H1 FY26 earnings conference call. We 0:10 10 seconds have with us today from the management Mr. Biagrain, managing director, Blueest Star Limited and Mr. Nikl Sony, group 0:18 18 seconds chief financial officer, Blueest Star Limited. As a reminder, all participant clients will be in the listenon mode and 0:26 26 seconds there will be an opportunity for you to ask questions after the presentation concludes. 0:32 32 seconds Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:39 39 seconds your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. 0:47 47 seconds Biagrajan. Thank you and over to you sir. 0:51 51 seconds Uh thank you. Um good morning ladies and gentlemen. You might have gone through the results uh of Q2 FI26. 1:02 1 minute, 2 seconds Uh so it was a tough quarter. Uh you are aware of uh the impacted summer season 1:08 1 minute, 8 seconds that continued through July. Uh post that on August 15th we had the GST 1:16 1 minute, 16 seconds announcement. So practically from uh 15th of uh August till September 22nd uh 1:23 1 minute, 23 seconds not only uh the room air conditioners business and also some some part of or some segments of commercial air 1:31 1 minute, 31 seconds conditioning business were also impacted because we are a company having uh 1:39 1 minute, 39 seconds interest in B2B as well as the B2C segments. uh we could uh deliver modest 1:47 1 minute, 47 seconds uh growth. Uh on the whole uh it was a tough quarter and the fundamentals are strong. The growth story for the 1:56 1 minute, 56 seconds industry is uh strong and even if you look at the CAGR from FI20 or you ignore 2:04 2 minutes, 4 seconds the COVID years you take from FI22 uh the industry has grown uh and blue 2:12 2 minutes, 12 seconds star has grown in double digits. So there is no doubt about the long-term prospects of this business. It is just 2:21 2 minutes, 21 seconds that uh in this particular financial year is tough. Uh we had mentioned that 2:29 2 minutes, 29 seconds it is probable that the second half of uh the financial year should be better than uh first half. We still believe so. 2:39 2 minutes, 39 seconds But having said that whether it will make up for the shortfall in Hatchwan, 2:46 2 minutes, 46 seconds it is I doubt at this moment going by what is happening in the market considering the inventory levels of room 2:54 2 minutes, 54 seconds air conditioners that are in the market uh you one would think that if if we if 3:01 3 minutes, 1 second the if we close the year with industry being flat, we being flat, we should be very happy. I don't think we will be 3:08 3 minutes, 8 seconds able to grow over the previous year at all given that it was a huge uh growth 3:15 3 minutes, 15 seconds year and uh it is it is also probable that the industry ends up with uh minus5 3:23 3 minutes, 23 seconds uh% over last year and blue star does better than uh that it it is also 3:30 3 minutes, 30 seconds probable because we are dependent on just two windows now that's uh in December prior to the energy level they 3:38 3 minutes, 38 seconds will change for couple of weeks and then you have to wait for uh summer season to 3:44 3 minutes, 44 seconds set in uh last few days of February and the month of March. That's all the window that is available as far as room air conditioner business is concerned. 3:55 3 minutes, 55 seconds uh commercial refrigeration business um it's it's smaller in terms of market size that grows but it cannot make up 4:03 4 minutes, 3 seconds for the shortfall in room air conditioners uh business uh commercial air conditioning uh it continues to grow 4:11 4 minutes, 11 seconds well while the order inflow was uh lower due to the reasons I mentioned because GS impact uh impact is also affecting 4:22 4 minutes, 22 seconds the certain segments like for example government or educational institutions so on and so forth and uh we we think 4:31 4 minutes, 31 seconds that that business will revive and uh electromechanical projects business other than the infra projects uh all 4:40 4 minutes, 40 seconds other uh segments are doing well whether it is buildings or data center or 4:46 4 minutes, 46 seconds manufacturing it is uh the matter of concern is the slow execution of inra 4:53 4 minutes, 53 seconds projects and the speed is not picking up uh there. So it is uh it is a rain interrupted match. Uh as I keep telling it is it is all that duck flu is method. 5:07 5 minutes, 7 seconds So we don't know how many overs are left or what is the asking rate and uh so rain keeps interrupting on one side. Uh 5:16 5 minutes, 16 seconds and uh the other way to look at it is uh it's uh first off of the movie was not 5:23 5 minutes, 23 seconds that interesting intermission post intermission one hopes that the movie will be uh good. Uh but on the whole one 5:32 5 minutes, 32 seconds will close the year with a great feeling. I don't think so because the momentum uh was somewhat disrupted but I 5:41 5 minutes, 41 seconds keep repeating that the uh CGR you estimate for any period over the past 5 5:49 5 minutes, 49 seconds years four years 3 years it is more than 15% for industry so in this whole thing 5:56 5 minutes, 56 seconds we seem to have uh done well better than the industry gaining market share uh but 6:04 6 minutes, 4 seconds fine fine internally I keep telling that uh everyone failed in that I failed with better marks is not the consolation but 6:12 6 minutes, 12 seconds we have we have done better than the uh industry. One more question that will come is inventory uh in the pipeline. Uh 6:23 6 minutes, 23 seconds so while post summer the inventory we thought during festival season it will get liquidated due to this GST interruption 6:31 6 minutes, 31 seconds it did not. uh for the period September 22nd till uh Diwali day it we witnessed as 6:41 6 minutes, 41 seconds far as blue star is concerned uh more than 35% sale but post that there is a 6:48 6 minutes, 48 seconds lull period we our inventory level based on the latest estimate as on date is 6:55 6 minutes, 55 seconds around 65 days of sale ideally it should be only 45 days of sale and uh I do not 7:03 7 minutes, 3 seconds know the industry level but I know the inventory levels are much higher than 65 days. So which means uh it is going to 7:12 7 minutes, 12 seconds be a period where all these inventory have to find way to the market and so 7:18 7 minutes, 18 seconds the the uh channel as well as manufacturers inventory liquidation will be a top priority from 1 of January. The 7:28 7 minutes, 28 seconds manufacturers have to produce new products or releabel the existing products depending on the energy 7:35 7 minutes, 35 seconds efficiency level. Um the uh 7:41 7 minutes, 41 seconds signal that we want to give is indeed uh second part half of the movie will be 7:47 7 minutes, 47 seconds better. There is no doubt about it. Uh and we will continue to uh maintain our 7:57 7 minutes, 57 seconds um fundamental principles that is grow faster than the market. uh control the expenses uh both operating as well as uh 8:06 8 minutes, 6 seconds capex uh find ways and means to maintain the margins or contain the deterioration of 8:14 8 minutes, 14 seconds the margin and uh close the year hoping that uh summer sets in early that's 8:24 8 minutes, 24 seconds where we are. So I hand it over to uh Mr. Nikil son uh for his uh remarks. 8:33 8 minutes, 33 seconds Thank you Mr. Tar Rajan. Uh good morning ladies and gentlemen. This is Nikil Sony and I will provide you an overview of 8:41 8 minutes, 41 seconds the results of Blueest Star Limited for quarter ended September 2025. 8:47 8 minutes, 47 seconds Coming to financial highlights in quarter 2 of FI26 the company has reported modest growth amidst multiple 8:55 8 minutes, 55 seconds challenges. The room air conditioner segment continued to witness demand slowdown after a subdued monsoon le Q1 9:03 9 minutes, 3 seconds FYI26 as prolonged drains and lower temperatures impacted secondary sales and delayed channel optic. Also the room 9:12 9 minutes, 12 seconds AC and commercial AC demand was deferred due to GST rate reduction announcement on 15th of August 2025 which 9:20 9 minutes, 20 seconds subsequently came into effect only on September 22nd 2025. In project business, execution of factories and 9:27 9 minutes, 27 seconds data center projects remain steady, though the pace of new order inflows was subdued. 9:33 9 minutes, 33 seconds Financial highlights for the quarter ended September 30, 2025 on a consolidated basis are summarized as follows. Revenue from operations for 9:42 9 minutes, 42 seconds quarter 2 of FI26 grew 6.4% 4% to rupees 2,422 9:49 9 minutes, 49 seconds crores as compared to rups 2276 crores in quarter 2 of FI25. 9:56 9 minutes, 56 seconds A bita excluding other income for Q2 FI26 improved to rupees 183.4 10:04 10 minutes, 4 seconds crores and aida margin of 7.6% as compared to rupees 149.3 crores and 10:13 10 minutes, 13 seconds aida margin of 6.6%. 6% in Q2 of FI25. 10:18 10 minutes, 18 seconds TBT grew 1.3% to rupees 133 crores in Q2 FI26 as compared to rupees 131 crores in Q2 FY25. 10:30 10 minutes, 30 seconds Tax expense for the current quarter was rupees 33.4 crores as compared to rupees 10:36 10 minutes, 36 seconds 35 crores in Q2 of last year. Net profit grew 2.8% 8% to rupees 99 crores in Q2 10:44 10 minutes, 44 seconds of FI26 as compared to rupees 96 crores in Q2 of FI25. 10:50 10 minutes, 50 seconds Carried forward order booked as of September 30, 2025 grew by 7.9% 10:59 10 minutes, 59 seconds to rupees 7,120 crores as compared to rups 6,598 11:05 11 minutes, 5 seconds crores as of September 30, 2024. carried forward order book as of March 3125 stood at rupees 6263 crores. 11:16 11 minutes, 16 seconds The capital employed as of September 30, 2025 increased to rups 3,531 cr as compared to rups 2550 crores as of September 30, 2024. 11:29 11 minutes, 29 seconds net borrowings of rupees 417 crores as of September 30 2025 as compared to net cash position of rupes 11:38 11 minutes, 38 seconds 185 crores as of September 30 2024. 11:44 11 minutes, 44 seconds Coming to business highlights for quarter two uh segment one that is electromechanical projects and commercial air conditioning systems. The 11:52 11 minutes, 52 seconds segment revenue grew 16.5% to rupees 1,664 11:58 11 minutes, 58 seconds crores in Q2 of FI26 as compared to rups 1,428 crores in Q2 of FI25. 12:08 12 minutes, 8 seconds Segment result was rupees 147 crores which was 8.8% 8% of revenue in the current quarter as compared to rupees 12:16 12 minutes, 16 seconds 119 crores which was 8.3% of revenue in Q2 of last year. Order inflow for the 12:24 12 minutes, 24 seconds quarter was flat at rupees 1,922 crores in Q2FY26. 12:30 12 minutes, 30 seconds In the previous years it was 1,900 crores. 12:36 12 minutes, 36 seconds Coming to electromechanical projects business while the inquiry inflows from buildings data centers and factories 12:43 12 minutes, 43 seconds were good order finalizations during Q2 FY26 was muted as far as infrastructure projects are concerned the company 12:52 12 minutes, 52 seconds continues to be selective owing to the strong order book and faster project execution billing growth during the 12:59 12 minutes, 59 seconds quarter was strong carried forward order book of electromechanical projects business was at rupees 4,840 13:07 13 minutes, 7 seconds crores as of September 30, 2025 as compared to rups 5,37 crores as of 13:14 13 minutes, 14 seconds September 30, 2024. It was a negative growth of 3.9%. 13:19 13 minutes, 19 seconds Coming to commercial air conditioning, the business grew in line with the market trends. However, billing pace moderated post GST reforms from mid 13:29 13 minutes, 29 seconds August until midepptember. The company continues to maintain its market leadership in ducted systems and scroll chillers and ranks among the top three in VRF and screw chillers. 13:42 13 minutes, 42 seconds International business uh with the approval process and trial marketing having been completed for few products 13:48 13 minutes, 48 seconds in the US market. The supply scaled in Q1 FI26 and Q2 FI26. 13:55 13 minutes, 55 seconds The tariff related uncertainties persist and the business should accelerate further once India US trade deal is concluded. With the successful 14:03 14 minutes, 3 seconds development of products for both US and Europe, the company continues to be optimistic about the prospects for international business. Overall, the 14:12 14 minutes, 12 seconds segment one margins saw an improvement in Q2 FY26 rising to 8.8% of revenue 14:19 14 minutes, 19 seconds compared to 8.3% of revenue in quarter 2 of last year. The improvement in margins is a result of changing mix of business within the segment. 14:30 14 minutes, 30 seconds Coming to segment two that is unitary products, the revenue deg 14:35 14 minutes, 35 seconds rs 694 crores in Q2 FY26 as compared to rupees 767 crores in Q2 FY25. 14:45 14 minutes, 45 seconds Segment result was rupees 43 crores that is 6.2% 2% of revenue in Q2 of FI26 as 14:52 14 minutes, 52 seconds compared to rupees 54 crores uh that was 7% of revenue in Q2 of FI25 15:02 15 minutes, 2 seconds cooling and purification products business unfortunately the Q2 FY26 was also impacted and the only silver lining 15:10 15 minutes, 10 seconds was the good secondary sales with effect from September 22nd 2025 with the energy level change scheduled for 15:17 15 minutes, 17 seconds implementation on January 1, 2026. It is likely that the Christmas and New Year sales would be good. Preparations are 15:25 15 minutes, 25 seconds underway for the launch of new products for pre-summer summer summer season 2026. 15:32 15 minutes, 32 seconds Coming to commercial refrigeration business, the business experienced a modest quarter with the GST rate reduction on various food products. We 15:41 15 minutes, 41 seconds expect significant demand growth in H2 of FY26. We are expanding our energy efficient and IoT enabled product range 15:49 15 minutes, 49 seconds to meet evolving c customer needs while deepening penetration in tier 2 and tier three markets through localized 15:57 15 minutes, 57 seconds distribution and service support. The segment margins were lower as compared to previous corresponding quarter. 16:05 16 minutes, 5 seconds In last year quarter two it the margins reported was 7% whereas in current year the c margins are 6.2%. 16:13 16 minutes, 13 seconds Coming to segment three that is professional electronics and industrial systems the revenue deg 16:20 16 minutes, 20 seconds rs 64 crores in Q2 of FI26 as compared to rupees 81 crores in Q2 of FI25 16:28 16 minutes, 28 seconds segment result was rupees 6 crores which was 9.6% of revenue in Q2 of FI26 as compared to rupees 5 crores which was 6.4% of revenue in Q2 of FI25. 16:40 16 minutes, 40 seconds The degrowth is primarily due to uncertainty surrounding the current business model of mech solutions business pending the finalization of 16:48 16 minutes, 48 seconds regulatory policy framework. Industrial solutions continued its strong growth momentum on the back of manufacturing 16:55 16 minutes, 55 seconds and testing demand. Data security solutions continued with steady performance driven by robust demand from BFSI and large enterprises. As the 17:05 17 minutes, 5 seconds business navigates through challenging times, efforts on expense rationalization have helped to improve the margin. 17:12 17 minutes, 12 seconds Coming to business outlook, we are optimistic about the prospects of roomac business as the benefits of GST rate rationalization will spur the demand in 17:21 17 minutes, 21 seconds quarter 3 of FY26. However, unseasonal rains in several parts of the country continue to be a matter of concern while 17:29 17 minutes, 29 seconds the order inflow in electromechanical projects business continues to slow. We expect demand revival in commercial air conditioning and commercial refrigeration businesses. 17:40 17 minutes, 40 seconds Several initiatives have been undertaken for reducing both operating costs as well as working capital in order to 17:47 17 minutes, 47 seconds substantially improve the H2 FY26 performance. 17:52 17 minutes, 52 seconds With that, ladies and gentlemen, I'm done with the opening remarks. I would like to now pass it back to the moderator who will open the floor for 18:00 18 minutes questions. We'll try and answer as many questions as we can. To the extent we are unable to, we will get back to you 18:07 18 minutes, 7 seconds via email. With that, we are open for questions. 18:12 18 minutes, 12 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 18:20 18 minutes, 20 seconds star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you 18:27 18 minutes, 27 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 18:35 18 minutes, 35 seconds wait for a moment while the question Qsembles. 18:41 18 minutes, 41 seconds The first question is from the line of Natasha Chen from Philip Capital. Please go ahead. 18:47 18 minutes, 47 seconds Thank you for the opportunity and good morning gentlemen. Uh first of all, congrats on a resilient set of numbers. 18:53 18 minutes, 53 seconds My first question is on segment one commercial AC. Um so commercial AC which is a higher margin business witnessed 19:01 19 minutes, 1 second loss of sales as per your opening commentary. Uh overall also execution has been slow on account of reigns. 19:08 19 minutes, 8 seconds Yet your topline growth was um I mean your topline growth was moderated to 16.5% uh versus 30% run rate before. Now 19:17 19 minutes, 17 seconds this segment saw margin expansion and it's also above a broader guidance of 7 to 7.5 range. So can you explain how 19:26 19 minutes, 26 seconds margin expansion happened and uh sequentially also it's been a sharp improvement. So were there any favorable terms with our vendors here? That's my first question. 19:36 19 minutes, 36 seconds Uh so thank you for asking this question. This will benefit others as well. Uh so you are right. uh this 19:45 19 minutes, 45 seconds segment uh comprises uh electromechanical projects as well as the commercial air conditioning and also 19:54 19 minutes, 54 seconds the service business. All the three are there. Now uh the margin in a particular quarter will 20:03 20 minutes, 3 seconds depend on uh which are the segments that have done well within broadly here. So the weightage of commercial air 20:11 20 minutes, 11 seconds conditioning or the weightage of electromechanical projects how it is. 20:14 20 minutes, 14 seconds Second part is connected with what kind of jobs in projects got closed. What kind of odd segments played a very major 20:23 20 minutes, 23 seconds role. Broadly for your guidance the margins are good in manufacturing data 20:30 20 minutes, 30 seconds center segments. margins are not that good in infrastructure project segments. 20:38 20 minutes, 38 seconds In uh again in commercial air conditioning products we have uh ducted or package air conditioning which are 20:46 20 minutes, 46 seconds conventional. We have got chillers. We have got also BRF systems. Again each 20:54 20 minutes, 54 seconds one of them have different set of profit margins. So in the quarter whether it is 7 7 and 1/2 sometime 8 uh you should not 21:03 21 minutes, 3 seconds actually worry at all what is the outlook the the potential for this business is just 7 to 7.5%. It can be 21:12 21 minutes, 12 seconds seven in some quarter uh 7 and a half in some quarter. Our guidance for the rest 21:18 21 minutes, 18 seconds of the year is also the same 7 to 7.5 that's how it will be. this segment is 21:26 21 minutes, 26 seconds uh is not going to be dramatically improve the margins in the coming quarters at all uh because there are 21:34 21 minutes, 34 seconds quite a bit of investments that are being made to enhance the reliability of the product. So therefore we are putting 21:42 21 minutes, 42 seconds money into the product and normally one will say that we are re-engineering the product and we are going to be improving 21:51 21 minutes, 51 seconds the margins by value engineering. uh that is not the case because the product is becoming very digital with the 22:00 22 minutes electronics content being very high as the sophistication is being built and quite a bit of the products are being or 22:07 22 minutes, 7 seconds components are being sourced from India and many manufacturers are there for the first time. So the guidance as far as segment one is concerned it is 77.5%. 22:20 22 minutes, 20 seconds That's what you should go ahead with. 22:25 22 minutes, 25 seconds And uh my second question is on segment two. So our top line has degrown by 10% and um both commercial refrigeration and 22:35 22 minutes, 35 seconds room AC has declined. Uh again your UCP margin has shown resilience and what is surprising me is Q on Q it has actually 22:42 22 minutes, 42 seconds improved. Uh my question uh and in conjunction if I check your creditors you've also made very steep payment to 22:50 22 minutes, 50 seconds your creditors. So my question here is did we avail some good cash discount from our creditors which actually protected our UCP margins? 23:00 23 minutes A number of things. The very first thing is that in Q1 if you if you look at it we were all investing for the summer 23:08 23 minutes, 8 seconds season and when April it was not happening second half of April will happen then we said May it is going to 23:15 23 minutes, 15 seconds happen. Uh weather forecast was also like that. So we keep we didn't get into any cost-saving measures at all plus 23:24 23 minutes, 24 seconds advertising expenses it was heavy like we were in IPL that commitment was made we had to continue with that now uh 23:32 23 minutes, 32 seconds subsequently when summer has not happened you do many things the very first thing is connected with 23:39 23 minutes, 39 seconds advertising which is easy to do and in shop demonstrators for example and you 23:46 23 minutes, 46 seconds go ahead and uh focus focus on manufacturing cost reduction and you will be also seeking uh discounts 23:54 23 minutes, 54 seconds wherever it is possible but the significant part is connected with cost reduction that's what had happened now 24:02 24 minutes, 2 seconds the going forward again you should ask this question what margin we are likely to end the year with for for your 24:09 24 minutes, 9 seconds benefit for uh rest of uh the uh analyst fund managers who are all joining this 24:16 24 minutes, 16 seconds call uh I uh you know we have been first of all the history is as follows that uh 24:23 24 minutes, 23 seconds 9 to 9.5% margin outlook was there then we toned it down to 8.5 to 9 when the summer 24:31 24 minutes, 31 seconds failed we said that still 8% is possible and as I see it now as I keep in mind 24:39 24 minutes, 39 seconds what is likely to happen in the coming months with huge inventory in the marketplace I think we should be very 24:46 24 minutes, 46 seconds happy the end the year anywhere between 7 to 7.5%. 24:52 24 minutes, 52 seconds And uh we we will work towards 7.5 it can as well be 7. It all depends now on 24:59 24 minutes, 59 seconds that February 2nd of March. Uh and the inventory have to move out before the energy level change. That's the outlook for that. 25:10 25 minutes, 10 seconds Got it. Sir, one last question if I may ask. uh you lowered your guidance from positive five earlier to now flatish. Uh 25:18 25 minutes, 18 seconds you had also recently addressed the media sometime around the festive uh period saying that you know our sales have been good and we maintain our guidance. So just wanted to understand 25:27 25 minutes, 27 seconds what really changed in the intering that we've there's a cut in our guidance in just a couple of days. That's 25:35 25 minutes, 35 seconds you asked that question. So the the question was that um my I I repeat what I had been 25:42 25 minutes, 42 seconds maintaining that uh whenever summer fails I said the second does well festival season as well the subsequent 25:51 25 minutes, 51 seconds uh summer season buildup in Q4 therefore there is always a possibility that you can make up and grow even by 10%. That's 26:00 26 minutes sort of the beginning statement when the GST cut came in fine they we had to wait and watch how fast this GST 26:07 26 minutes, 7 seconds implementation will happen and post that we will see and 10% growth we had said 26:14 26 minutes, 14 seconds fully 15% potential was there that was the thinking the secondary sale movement 26:21 26 minutes, 21 seconds between September 22nd and uh October 18th 19th was 35% in our case actual ual 26:30 26 minutes, 30 seconds uh sale to the consumers from the channel. 26:35 26 minutes, 35 seconds Post that it is uh it is dull. The movement is not taking place and uh the 26:43 26 minutes, 43 seconds window that will happen will be only before the energy level change and the rain continues uh uh all across the 26:50 26 minutes, 50 seconds country and uh so the festival season has not gone well despite the uh GST 26:59 26 minutes, 59 seconds reduction. It has helped to reduce the inventory but what I could make out is that all the players are carrying 27:06 27 minutes, 6 seconds inventory. In our case, I told you we would have preferred it to be 30 to 45 days. Last year it was 34 days as of 27:14 27 minutes, 14 seconds now, but unfortunately it is 65 days of inventory is there. If you add up what is in the channel and what is with us. 27:23 27 minutes, 23 seconds So this will lead to uh our the the sale happening to the channel and the channel 27:30 27 minutes, 30 seconds carrying the inventory even till February. So therefore I I am even though I may be uh I may be um hearing 27:39 27 minutes, 39 seconds on a wrong side it it is probable that February March is so very great like last year everybody is talking up uh 27:48 27 minutes, 48 seconds because there will be shortage of material in summer. Um I I I don't think that will be the situation. So therefore 27:56 27 minutes, 56 seconds one should be happy if it match last year number even with that the CAGR if you look at it will be some 18%. Uh for 28:05 28 minutes, 5 seconds the industry slightly better for blue star and I also I am also cautioning that it is now dependent on that that 6 28:14 28 minutes, 14 seconds weeks in Q4. So it can as well be a growth which is uh which is minus5. It 28:24 28 minutes, 24 seconds could be so the range could be -15 to zero. But as of now, I am still hoping that we will one uh can attempt to if if 28:32 28 minutes, 32 seconds there is going to be a good summer outlook. Uh that's the change. The festival season has not gone on as one 28:40 28 minutes, 40 seconds would have expected. And I also would think that uh you know there is a comparison that is me being made with 28:47 28 minutes, 47 seconds auto sector and obviously uh that industry uh was not growing and in this case you are comparing with a huge 28:55 28 minutes, 55 seconds previous year and in terms of hierarchy people may be putting that uh money uh 29:02 29 minutes, 2 seconds in their hands into auto ahead of air conditioners. They will wait for the summer season. It is it is probable. 29:11 29 minutes, 11 seconds Last line is I don't I don't see any problem in the long-term growth outlook at all. It is just that this is a rain affected uh year. 29:24 29 minutes, 24 seconds Thank you. Thank you sir. 29:31 29 minutes, 31 seconds Thank you ladies and gentlemen. In order to ensure that the management will be able to address all the questions from 29:38 29 minutes, 38 seconds the participants in the conference call, we request you to kindly limit your questions to per participant. Should you have a follow-up question, please rejoin 29:47 29 minutes, 47 seconds the queue again. The next question is from the line of Bumika Nayer from Dam Capital. Please go ahead. 29:55 29 minutes, 55 seconds Yeah. Uh thank you sir. Um the question is on the commercial refrigeration part of it. uh last year we've seen uh some 30:03 30 minutes, 3 seconds challenges out there and if there was uh a muted growth or even a decline in that segment um could you kind of speak about 30:11 30 minutes, 11 seconds how the growth has panned out in YTD on that segment just to understand uh uh you know either qualitatively or with 30:19 30 minutes, 19 seconds some numbers whichever manner that you can speak about and secondly in terms of uh the REC segment as said that you know 30:27 30 minutes, 27 seconds there's a lot of inventories etc um as we get into the year end before the BE rating changes. Do you think there could 30:35 30 minutes, 35 seconds be some pressure on margins as uh the industry tries to liquidate the inventory prior to the B rating change 30:42 30 minutes, 42 seconds by December? Um could that be a bit of a challenge? And lastly, if I may also squeeze in on our working capital has 30:50 30 minutes, 50 seconds seen, you know, quite a bit of an increase and our net cash levels going to net debt levels as this inventory is 30:58 30 minutes, 58 seconds wound down by the year end. Um do we see us coming back to the net cash flows? 31:05 31 minutes, 5 seconds Uh on the cash part uh Nikl will explain the cash is not connected with working capital alone. Uh there's a capex that 31:14 31 minutes, 14 seconds has to be incurred for long term that will also determine that. Um so we first perspective is when we talk about growth 31:23 31 minutes, 23 seconds uh we have to keep in mind we are talking uh about growth over uh uh unprecedented year that's what uh is 31:32 31 minutes, 32 seconds probably giving a wrong picture. I again repeat that you calculate a c the industry has been growing blue star has been growing even in room air 31:41 31 minutes, 41 seconds conditioners. So the uh so you are first I will answer the room air condition margins. If the inventory levels are 31:50 31 minutes, 50 seconds higher in the market and uh there is demand will be there basically because 31:57 31 minutes, 57 seconds energy level change is there and once the energy level change is implemented the prices will be higher for the new 32:04 32 minutes, 4 seconds energy labelled products. So the demand will be there. So it is a question of uh 32:12 32 minutes, 12 seconds the demand versus what is available and uh one's aspiration for the market 32:18 32 minutes, 18 seconds share. There will be all players would like to reduce their inventory levels 32:25 32 minutes, 25 seconds and there will be pressure on the margins and as far as uh blue star is 32:32 32 minutes, 32 seconds concerned that we we we want to grow faster than the market. We have been disciplined about the margins and we we 32:42 32 minutes, 42 seconds have the track record of maintaining the price discipline. So we will attempt to 32:49 32 minutes, 49 seconds hold on to this uh margin level but uh the same way uh at the same time uh we 32:57 32 minutes, 57 seconds have indicated to you we will we would like to close the year between 7 to 7 and a half. 33:04 33 minutes, 4 seconds So the summon substance there will be pressure on margins but we have to deliver this we will stay disciplined 33:11 33 minutes, 11 seconds and find ways and means to achieve that uh profit level but uh if the inventory levels are so very high one should 33:20 33 minutes, 20 seconds anticipate pressure on the margins. So this is the first part the second part of the uh question. The very first 33:27 33 minutes, 27 seconds question you asked is commercial refrigeration. 33:30 33 minutes, 30 seconds Last year uh yes there were regulatory changes in terms of uh Bureau of Indian 33:38 33 minutes, 38 seconds standards in water coolers and uh as well as deep freezer uh that had 33:45 33 minutes, 45 seconds happened prior to March itself but it impacted the rest of the period. uh those those are all over but the growth 33:52 33 minutes, 52 seconds again the these two products are also impacted due to monsoon or rain uh intermittent rains but still it has 34:01 34 minutes, 1 second grown it has grown uh in the order of around 7 to 8%. But the market size 34:08 34 minutes, 8 seconds being smaller, it cannot make up for uh it the the shortfall in the room air conditioners outlook for that uh that 34:17 34 minutes, 17 seconds product it will still grow. That's what we feel and given that uh that industry 34:24 34 minutes, 24 seconds has gained significantly in uh in the GST the food products or food retail uh 34:32 34 minutes, 32 seconds they are all uh our customers are all investing in uh huge expansion so that should translate into business and uh 34:42 34 minutes, 42 seconds one uh one one can say that it'll be somewhere around 7 and a half to 8% growth at least should be possible uh in 34:52 34 minutes, 52 seconds uh this financial year as a whole. Uh Nickel on Yeah. So coming to cash flow 35:00 35 minutes as Mr. Khagar Rajan also remarked it's not just working capital it is also capex uh that one has to look at in totality. Uh and in this case 35:09 35 minutes, 9 seconds particularly you will have to see over a period of time. uh you're right in saying that it was a net cash position last year and before that and now we have moved to a net borrowing position. 35:20 35 minutes, 20 seconds Uh it has to be seen in light of last two years. If you see in 2023 we had a QIP which so that was a cash position 35:27 35 minutes, 27 seconds which was available in 23 and 24 and 25 was an exceptional year in terms of uh sales. So you had very good cash across 35:36 35 minutes, 36 seconds at the same time you had a working capital levels which were at a minimum. 35:40 35 minutes, 40 seconds So all of that aids in cash generation and you are seeing and comparing it with a year in which there is a inventory buildup as we all know. So the working 35:49 35 minutes, 49 seconds capital levels have gone up at the same time you have to continue with your capex. So given that I think uh this 35:56 35 minutes, 56 seconds kind of borrowing position that we are having is given uh looking at the projections by year end whether we will 36:04 36 minutes, 4 seconds back be to the net cash position I think a lot hinges as Mr. 36:09 36 minutes, 9 seconds again said on the last six weeks on how the February and the March turns out to be and how in December the inventory 36:16 36 minutes, 16 seconds levels can be brought down. If the year goes uh and well and the estimated kind of volumes do come back, there is no 36:25 36 minutes, 25 seconds reason why we should at least uh not be boring levels should not come down. But at the same time, if the last 6 weeks 36:32 36 minutes, 32 seconds and December inventory levels don't come down, then we could see the continuing borrowing uh in the company's balance sheet. That's how it will be. 36:45 36 minutes, 45 seconds Sure. Thank you. All the best. 36:50 36 minutes, 50 seconds Thank you. The next question is from the line of Omang Ma from COTC Securities. Please go ahead. 36:57 36 minutes, 57 seconds Hi. Uh thank you for the opportunity. Uh so just wanted to check on your uh commercial AC particularly for data 37:05 37 minutes, 5 seconds centers, data center chillers. So from what we understand you had some start in the air cooled uh data centers and you 37:13 37 minutes, 13 seconds were developing something on liquid side. uh possible to share any update and any outlook on that particular business that's the first question 37:20 37 minutes, 20 seconds uh the um you know first of all in data centers uh MEP part of it we are leading 37:28 37 minutes, 28 seconds uh so that doesn't involve any equipment manufactured by us we continue to be preferred vendor in that segment 37:37 37 minutes, 37 seconds uh second part is connected with which are the equipment that we can deliver so we do have uh some chillers as and some 37:46 37 minutes, 46 seconds chillers are being uh developed and on the um liquid cooling part of it. Uh we are 37:54 37 minutes, 54 seconds exploring some partnerships and we are continuing to explore. uh I don't think that these products will be launched 38:03 38 minutes, 3 seconds before the end of this financial year at all and uh the the these are high-tech products and one will have to look at 38:12 38 minutes, 12 seconds the proper field trials and uh commercializing that product category. 38:19 38 minutes, 19 seconds So it is not going to be making any kind of a significant contribution in this financial year. 38:27 38 minutes, 27 seconds Got it sir. And the second question was on your uh slight caution in terms of order inflows in MEP. Uh anything 38:34 38 minutes, 34 seconds particular that is kind of u uh you know dragging uh the inflow because overall we are seeing quite a lot of tailwinds 38:42 38 minutes, 42 seconds right uh on uh data centers and even private sector capex. 38:48 38 minutes, 48 seconds Uh no it it is not a slight caution. It is a serious caution uh in the in the sense 38:55 38 minutes, 55 seconds um look for me uh the enquiry inflow will uh will uh indicate order 39:03 39 minutes, 3 seconds finalization trend. Now inquiry inflows are lower and order finalization are 39:10 39 minutes, 10 seconds taking time in quite a few segments and then existing projects are uh infra 39:18 39 minutes, 18 seconds projects basically they they are taking much more time than what one would have estimated. So therefore we will be 39:26 39 minutes, 26 seconds cautious you know our principle there we are not chasing market share there we are interested in good margins and or reasonable margins and good cash flow. 39:38 39 minutes, 38 seconds So therefore the caution is see the the the issue will be this right that when 39:45 39 minutes, 45 seconds you have uh the hypothesis could be you have a 39:51 39 minutes, 51 seconds bad uh summer therefore room air conditioner business or commercial refrigeration business is impacted. Uh 40:01 40 minutes, 1 second that should not lead to suddenly changing our approach to projects business. uh the the we we our 40:09 40 minutes, 9 seconds enterprise risk uh mechanism uh is very clear that uh we will be 40:16 40 minutes, 16 seconds cautious. That is the truth. Uh just because there is a problem in do air condition business. It is not that we 40:24 40 minutes, 24 seconds will go ahead and book any order and uh try to keep the revenue up. That is not the principle of or the philosophy of blue. 40:35 40 minutes, 35 seconds Got it sir. Makes sense. Thank you and all the best. 40:41 40 minutes, 41 seconds Thank you. The next question is from the line of Tal Sep Tulsy from Sundar Nam alternates. Please go ahead. 40:51 40 minutes, 51 seconds Uh yeah good afternoon sir. Uh first question is uh pertaining to uh we doing better than industry. Uh definitely 40:59 40 minutes, 59 seconds points to some market share uh gains that we've had in the quarter. uh if you could speak uh more on regional color 41:07 41 minutes, 7 seconds how your strategy of gaining market is panning out uh market share gains in first half of this year were more pronounced in north south or any other specific region. 41:17 41 minutes, 17 seconds Uh the first caution is that I I will not the results of many companies are not announced. I I will not say that we are doing better than the industry but I 41:26 41 minutes, 26 seconds know in terms of the volumes um based on our estimates I think in Q2 the industry 41:34 41 minutes, 34 seconds would have shrunk by around 17% and our estimate is in room air conditioners we have shrunk only by 12%. In Hutch one 41:42 41 minutes, 42 seconds our estimate is industry would have shrunk by 15% and we have shrunk only by 10%. to that extent we may have done 41:51 41 minutes, 51 seconds better again it is all other estimates so that disclaimer I want to place the second part is that we have indeed 42:00 42 minutes analyzed the the uh growth is or the uh the extent of the growth is same across 42:09 42 minutes, 9 seconds all all all regions because it is not making a significant uh difference at all um the northern region 42:19 42 minutes, 19 seconds has been doing better than the previous year because of our own pen penetration 42:25 42 minutes, 25 seconds had been lower there uh to that extent but there is no uh significant you know you can't figure out a single market 42:33 42 minutes, 33 seconds which is doing extremely well definitely not all are impacted in in some manner 42:41 42 minutes, 41 seconds that's true and uh so second question is regarding this u uh average selling price increase due to Elong when you 42:49 42 minutes, 49 seconds guide for let's say 5% growth this year uh you are uh guiding more in terms of volumes is it or you are building in 42:57 42 minutes, 57 seconds this price increase your volumes will be down by let's say 5 to 10% and with the you might be 5% higher for the year 43:06 43 minutes, 6 seconds no I I'm not you know my in my case the volume or the revenue I'm keeping the 43:13 43 minutes, 13 seconds same whatever change has taken place the if you are asking um post the energy label change but but 43:21 43 minutes, 21 seconds what I'm comparing with I I'm comparing with the previous year correct and there wouldn't be any significant difference 43:29 43 minutes, 29 seconds so one can say that for the period uh January to March because the energy label change has 43:38 43 minutes, 38 seconds taken place volume to price uh or the average price realization may be higher compared with 43:45 43 minutes, 45 seconds the Q4 to Q4 one can argue uh but indeed it will be so but right now I'm not getting into that at all the 43:54 43 minutes, 54 seconds I am keeping the average price realization of last year and this year same on that basis I'm saying the growth 44:02 44 minutes, 2 seconds volume revenue for this guidance I'm not changing anything okay it'll be better in case whatever that price increase comes in last 44:10 44 minutes, 10 seconds question is sir on these payables I think there was a very sharp increase of thousand crores uh I mean we paid much faster in the 44:18 44 minutes, 18 seconds balance sheet just checking on that uh any specific reasons why it's showing the 956 crere 44:27 44 minutes, 27 seconds this particular quarrel with uh the finance provisions it it is all on that 44:34 44 minutes, 34 seconds particular last day and how it will make a difference I don't know that to in the middle of the year so the the question 44:41 44 minutes, 41 seconds is that one you know somebody can pay on 30th of September or 7th of October 44:49 44 minutes, 49 seconds and uh so according to me that is not the measure that's what I feel nicely 44:56 44 minutes, 56 seconds yeah I think you have covered it see basically you are looking at over March uh one has to see over a longer period of time I don't think at the month end 45:05 45 minutes, 5 seconds it's a right reflection because whatever gets built up in March gets paid out in April uh and that's how one has to see so if you just look at March to 45:14 45 minutes, 14 seconds September it is it is more or less going to be the story every time if you see I agree. Okay, understood. Thank you so much. Thank you. 45:22 45 minutes, 22 seconds And one has to realize that it is a seasonal nature. So in March technically you will have more buildup also happening. So that's the other reason one. 45:29 45 minutes, 29 seconds Yeah. Yeah. No, but I'm looking year on year. Last year there was let's say 350,000 suddenly seems very high. So the reason I just check but 45:41 45 minutes, 41 seconds thank you. The next question is from the line of Adita Bhartya from Invest. Please go ahead. 45:49 45 minutes, 49 seconds Uh hi, good afternoon sir. Uh so my first question is uh on the inventory levels that you spoke about. Just wanted 45:57 45 minutes, 57 seconds this clarification. The 60 to 65 days of inventory is the combined inventory that uh brands and uh channel is carrying. Is that so? 46:05 46 minutes, 5 seconds That's right. 46:08 46 minutes, 8 seconds Understood. And within this uh uh you according to you inventory is higher at both the levels. Even channel is already 46:16 46 minutes, 16 seconds carrying much higher inventory and to that extent there may be some difficulty in selling uh uh uh inventory before 46:24 46 minutes, 24 seconds December uh before the new energy efficiency norms come in. Is that the reason why you are anticipating some bit of uh uh pricing pressure? 46:33 46 minutes, 33 seconds No. Two things you to keep in mind. First of all, you cannot stop a factory. 46:38 46 minutes, 38 seconds Correct? One. Second fact is that always for summer season, uh you start build 46:46 46 minutes, 46 seconds manufacturing and building the inventory from December onwards. You end up building the inventory. Now you got you you have inventory is with you. 46:57 46 minutes, 57 seconds Inventory with the dealer. So you are regulating the production in such a manner that whatever you have produced 47:05 47 minutes, 5 seconds you will be able to sell the dealers will be able to sell. Now the question is what dealers buy they should 47:12 47 minutes, 12 seconds liquidate it before the summer. You have to pass a judgment that what will be uh the summer season demand and you can't 47:21 47 minutes, 21 seconds wait for commencing the production in February for or January for the February and March and the new label product 47:29 47 minutes, 29 seconds production also will have to be commenced. So it is a complex situation at the moment. Now fact of the matter is 47:37 47 minutes, 37 seconds that the festival season have not gone on well and uh one GST interruption post 47:46 47 minutes, 46 seconds that there was good now you have got rains and disruptions and it has to pick up at some point of a time around the 47:54 47 minutes, 54 seconds 15th of December. That is why the caution is 48:01 48 minutes, 1 second and I suppose all all manufacturers are intelligent. They are not going to be blindly producing correct they all of 48:08 48 minutes, 8 seconds them will regulate and it has happened in the past as well that is you do but only thing here is here is a cut off 48:17 48 minutes, 17 seconds I can't sell the you know if you want to sell this product beyond 31st of December you have to reabel that as per 48:25 48 minutes, 25 seconds the new energy label norm in that case isn't it so happening uh 48:32 48 minutes, 32 seconds that the new manufacturing start doing as per the new uh efficiency norms because if we curtail production by 48:39 48 minutes, 39 seconds beyond a certain level then unabsorbed overheads may also start hitting uh hitting 48:47 48 minutes, 47 seconds all that in life it carries on there the manufacturing planning is differently you know the it is not you know there 48:54 48 minutes, 54 seconds are platforms there are common components and how it has to be done it's that that is we know how to do it 49:03 49 minutes, 3 seconds exactly ly what numbers will be produced between now and 31st of December that has to be closely monitored and done. 49:14 49 minutes, 14 seconds Understood sir. Uh and just the last bit on uh segment three which has been kind of struggling for some time. How should 49:21 49 minutes, 21 seconds we think about the segment from a slightly longerterm perspective? 49:25 49 minutes, 25 seconds Yeah, I don't think it carries a significant weightage to blue star performance. It's a business we have been in for a long 49:34 49 minutes, 34 seconds period of time. Uh there are set of uh customers who who are uh who are looking 49:42 49 minutes, 42 seconds forward to blue star contributing in that particular segment and it it's not 49:49 49 minutes, 49 seconds uh consuming any capital and uh there are principles who are uh who have a very long relationship. 49:58 49 minutes, 58 seconds So industrial uh systems business it will continue to grow. It is it is directly there is a correlation 50:08 50 minutes, 8 seconds uh with the manufacturing uh investments of the GDP growth. So one can say that 50:14 50 minutes, 14 seconds at a c year of 10 to 12% it will grow the med business uh in which which is 50:24 50 minutes, 24 seconds connected with diagnostic uh machines like MRI CT scanner right at the moment 50:31 50 minutes, 31 seconds uh there are uh regulatory uncertaintity the they are yet to announce the regulations pertaining to uh the 50:41 50 minutes, 41 seconds refurbished uh medical diagnostic equipment. That policy is in the making. 50:48 50 minutes, 48 seconds Now uh I we we are not sure at all that how this policy will pan out. There is one making India requirement. 50:57 50 minutes, 57 seconds Refurbished machines that obviously will have to be regulated in what form it will be regulated we do not know. So to 51:05 51 minutes, 5 seconds that extent there is uncertainty out there. So the outlook is that till 51:14 51 minutes, 14 seconds such time that policy is announced which could be uh Q4 of this year uh it it is 51:22 51 minutes, 22 seconds going to be muted industrial systems with the growth in manufacturing or the these products are consumed by even uh 51:31 51 minutes, 31 seconds many laboratories educational institutions that continues to do well. Understood, sir. That's very helpful. 51:40 51 minutes, 40 seconds Thank you. Thank you. 51:45 51 minutes, 45 seconds Thank you. A reminder to all the participants. You may limit your questions to per participant. 51:52 51 minutes, 52 seconds The next question is from the line of Kayor Pandya from ICICA Credentials Life Insurance Company Limited. Please go ahead. 52:02 52 minutes, 2 seconds Uh thank you. Uh just one question that is on electromechanical uh segment. 52:06 52 minutes, 6 seconds Segment one uh considering the slowdown in order intakes and order book how should we think of growth for say next 52:15 52 minutes, 15 seconds three or four quarters uh and any qualitative color on uh anything is changing uh or anything is decelerating 52:24 52 minutes, 24 seconds as far as say uh growth is concerned and in that backdrop how should we think of profitability as well not for this year 52:31 52 minutes, 31 seconds but say probably next uh uh four five quarters. Thank you. 52:36 52 minutes, 36 seconds for the segment one you are asking projects. 52:39 52 minutes, 39 seconds Yes. Yes. Yes. Segment one. Yes. Segment one there are two parts. one is the commercial air conditioning and I would 52:46 52 minutes, 46 seconds uh I would say that that segment has huge potential to grow again because it's a very large uh uh segment where 52:56 52 minutes, 56 seconds you have shop showroom boutiques uh manufacturing small hospitals for healthcare and tire 53:04 53 minutes, 4 seconds three four five many uh such establishments getting air conditioned. 53:09 53 minutes, 9 seconds uh my uh guidance will be it will it will be having a CAGR of 12% over the 53:17 53 minutes, 17 seconds next 5 years. So that is that is the industry and we should we should do uh better than the industry. That is the 53:25 53 minutes, 25 seconds attempt there. As far as projects, business is concerned, the there will be plenty of opportunities to grow as 53:33 53 minutes, 33 seconds infrastructure is uh growing and as manufacturing is growing as data center investments and data center growth also 53:40 53 minutes, 40 seconds will begin because we are now having huge uh amount of inquiries growing 53:48 53 minutes, 48 seconds uh by uh 10 to 15% is very easy. But the question is that uh good cash flows good 53:57 53 minutes, 57 seconds margin if that is the case I would I would say that 10% growth is the guidance 54:07 54 minutes, 7 seconds there is no deceleration I mean uh looking at the order book and order inflow uh should we assume couple of quarters or three four three four 54:15 54 minutes, 15 seconds quarters uh the growth rate may be lower yeah no it it is not I don't see a 54:23 54 minutes, 23 seconds deceleration uh definitely not right now the order inflow was muted but it should come back that's not a problem there 54:32 54 minutes, 32 seconds there is a reason that business complete is going is cyclical in nature so I I will not look at the deceleration at all 54:41 54 minutes, 41 seconds understood note that sir thanks a lot all the best thank you the next question is from the 54:50 54 minutes, 50 seconds line of manoj kodi from aquarius capital please go ahead. 54:55 54 minutes, 55 seconds Yeah, thanks for the opportunity sir. So overall uh when I look at the commentary throughout the call so somewhere 55:02 55 minutes, 2 seconds definitely there is there has been caution. So just want to understand uh whether this is the near-term caution 55:10 55 minutes, 10 seconds that we are seeing uh because you also talked about the demand momentum getting disrupted or probably you believe like 55:19 55 minutes, 19 seconds system actually your outlook for FI27 also uh probably has been impacted uh 55:28 55 minutes, 28 seconds and probably now your view has changed a bit. So if you can throw broad color on the overall because if you look at today 55:37 55 minutes, 37 seconds on the comment we have sounded more cautious on commercial ACs as well as on room air conditioners. So just want to 55:46 55 minutes, 46 seconds have a broad understanding about how we look at the things from near-term that is X2 and from FI27 point of view. 55:54 55 minutes, 54 seconds Yeah. So the commercial air conditioning there is no caution at all. It is that 56:01 56 minutes, 1 second 12 to 15% kind of a growth has been the story there. It is not suddenly going to 56:07 56 minutes, 7 seconds become 25 30% and all that never that industry has grown like that at all and 56:16 56 minutes, 16 seconds there is no caution there whatsoever. It is just that there were disruptions this year and it is not summer dependent 56:23 56 minutes, 23 seconds again. So there is absolutely no caution whatsoever in uh whatsoever in uh 56:30 56 minutes, 30 seconds commercial air conditioning projects business we have been always cautious the uh ever since 2011 we are very clear 56:40 56 minutes, 40 seconds that you won't chase market share it has to be based on the free cash flows and 56:49 56 minutes, 49 seconds margins uh that's how it is and that business is fully dependent on the order book that you have, order inflow that 56:58 56 minutes, 58 seconds you are seeing. Now order book you have seen that is not a significant expansion in the carried forward order book and 57:06 57 minutes, 6 seconds the order inflow is dependent on also the enquiry inflow. Going by that we are 57:13 57 minutes, 13 seconds telling you we are cautious and added to that we do have let's say we we we have explained this 57:21 57 minutes, 21 seconds area there there are infra projects which are electrification railways metro railway 57:31 57 minutes, 31 seconds airports uh water like that there are data center factories is another segment there are buildings as another segment 57:39 57 minutes, 39 seconds buildings will include even hospitals Now within these three buckets we are it's a d-risking factor what kind of 57:48 57 minutes, 48 seconds orders I should have and uh in that particular part while the buildings or 57:56 57 minutes, 56 seconds factories data center they are all getting executed as per the time frame infra projects are taking time therefore 58:04 58 minutes, 4 seconds I am not able to release some headroom for taking another orders uh that's about all so therefore We are cautious. 58:12 58 minutes, 12 seconds I am summarizing room air conditioner is the largest part of the business. It is 58:18 58 minutes, 18 seconds a summer impacted year and some the the rain keeps interrupting. There is a GST disruption and even if you account for 58:27 58 minutes, 27 seconds it CAGR is 18 and CG outlook for that business is 19. There will be a year in which it'll grow by 25 another year it 58:36 58 minutes, 36 seconds will be minus 5. It doesn't matter. And the outlook is positive and we are we have gained market share we will move 58:45 58 minutes, 45 seconds towards 15% market share and by FI27 we should get to uh 15% market share that 58:53 58 minutes, 53 seconds is a goal there and commercial air conditioning by nature it will be only 58:58 58 minutes, 58 seconds 12% CAGR growth and there we will grow ahead of the market so there is 59:07 59 minutes, 7 seconds absolutely no problem electromechanical projects we will maintain it only at around 10%. It the cash flow and the 59:16 59 minutes, 16 seconds profits are important. So the caution is uh the you may be getting that feeling 59:25 59 minutes, 25 seconds because I am changing the outlook. I said room air conditioner for example can uh make up for the summer and still 59:34 59 minutes, 34 seconds grow tense. That has been the history so far. that is that is looking very unlikely and uh if if February March 59:42 59 minutes, 42 seconds does well one can look at matching last year's market size and quite probably it may be even lower at 59:51 59 minutes, 51 seconds this juncture that's all I can say so in this case on rumor conditionals so keeping aside FI26 obviously this is a 1:00:00 1 hour year with lot of uncertainty but if I look at a 2-year KA let's say from FI25 to FI2 27s when we are south that we 1:00:09 1 hour, 9 seconds have been talking about 15% k growth this indicates in fi 27 we should grow 1:00:16 1 hour, 16 seconds by close to around 30 35% for that 15 17% keer growth see here you can't doing two year 1:00:24 1 hour, 24 seconds excluding one year okay that that's not the way to do it 1:00:30 1 hour, 30 seconds according to me if you look at the fi 20 to 26 it is 16% % FI 21 to 26 it will be 1:00:38 1 hour, 38 seconds 24%. FI 22 to FI 26 21%. FI 23 to FI 26 1:00:44 1 hour, 44 seconds it will be 15%. The by many estimates uh FI 1:00:51 1 hour, 51 seconds 25 to FI30 it will be 19%. So don't worry about it. 1:00:57 1 hour, 57 seconds Okay sir. Thank you sir and wish you all the best. Thank you. 1:01:04 1 hour, 1 minute, 4 seconds Thank you. The next question is from the line of Nanch from BNP Prabast. Please go ahead. 1:01:12 1 hour, 1 minute, 12 seconds Um, yeah. Hi sir, thank you for the opportunity. Uh, and I apologize if this question is already covered. Uh, firstly want to better understand how we are 1:01:19 1 hour, 1 minute, 19 seconds expecting the secondary demand to pick up during the weak winter season on the account of energy rating change. Uh, given that the demand has already 1:01:26 1 hour, 1 minute, 26 seconds weakened post festive despite at least a 7 to 10% cut in the retail prices. So do we mean a pick up in the primary sales 1:01:34 1 hour, 1 minute, 34 seconds by brands as they liquidate their old inventory or the higher discounts to drive the secondary demand during this Christmas and New Year period. 1:01:42 1 hour, 1 minute, 42 seconds Uh so first first part the growth we are talking about is over the previous year. 1:01:47 1 hour, 1 minute, 47 seconds Previous year also winter this year also winter. Previous year there was no energy level change now there is energy level change. What is the significance 1:01:57 1 hour, 1 minute, 57 seconds of energy level change? So you are buying a fivestar air conditioner. the fivestar air conditioner which is before 1:02:04 1 hour, 2 minutes, 4 seconds 31st of December and post 31st of December there may be a 7 to 10% price 1:02:11 1 hour, 2 minutes, 11 seconds increase of course the new fivestar will be highly higher energy efficient but the consumer will think that I am buying 1:02:18 1 hour, 2 minutes, 18 seconds a fivestar air conditioner which is a fivestar air conditioner of 2025 1:02:25 1 hour, 2 minutes, 25 seconds so therefore it comes as one added thing second is that the GS has brought down 1:02:32 1 hour, 2 minutes, 32 seconds the price and uh there was lull post uh Diwali. So what has gone wrong? Nothing 1:02:40 1 hour, 2 minutes, 40 seconds has gone wrong, right? the penetration levels are lower and people want to buy air conditioner and the the it it is 1:02:49 1 hour, 2 minutes, 49 seconds because last year was a huge year we are feeling the pain otherwise I don't think uh there is something uh fundamentally 1:02:58 1 hour, 2 minutes, 58 seconds has changed or some other product has replaced this product so therefore 1:03:05 1 hour, 3 minutes, 5 seconds uh in in Q3 whether compared with uh the previous 1:03:13 1 hour, 3 minutes, 13 seconds year. Uh yeah, 10% growth should be looked at. By all means, you should look 1:03:20 1 hour, 3 minutes, 20 seconds at it and it can happen. The caution is only there is already enough inventory there in the field that has to get 1:03:29 1 hour, 3 minutes, 29 seconds liquidated and the dealer's working capital level should permit them to stock other products for me to uh post revenue. Uh that's where we are. 1:03:42 1 hour, 3 minutes, 42 seconds Um sure sir very helpful. Uh secondly sir just want a clarification that when we say uh 65 days of sales approximately 1:03:50 1 hour, 3 minutes, 50 seconds at the channel and branch so is it possible to quantify this in terms of approximate volumes asking this because like when when we say two month of sales 1:03:59 1 hour, 3 minutes, 59 seconds whether it is the two months during summer season or the average monthly sale for the entire year. So how do we look at it? And I know when when I say 1:04:07 1 hour, 4 minutes, 7 seconds this it is estimating the sale during this winter season only. It is not summer 1:04:14 1 hour, 4 minutes, 14 seconds in summer. This this will mean that 15 days of summer inventory. We don't do that at all. When I when I say as on date 1:04:22 1 hour, 4 minutes, 22 seconds and uh looking at the winter season sales and how much more is there and I 1:04:32 1 hour, 4 minutes, 32 seconds said that normally one would have been happy with 45 it is at 65. 1:04:39 1 hour, 4 minutes, 39 seconds Uh sure sir. Thank you so much. uh and all the best. 1:04:46 1 hour, 4 minutes, 46 seconds Thank you. The next question is from the line of Bhakkesh from Kotic Securities. Please go ahead. 1:04:55 1 hour, 4 minutes, 55 seconds Good afternoon sir. Um thank you for the opportunity. So I assume the unitary product segments include the cassette 1:05:01 1 hour, 5 minutes, 1 second acs and the uh tower ACs which are used in projects. So just one confirmation whether this is a part of the UCP 1:05:10 1 hour, 5 minutes, 10 seconds business and can you help us with the growth numbers particularly for room AC's for quarter two of FI26 and what is the year end outlook for this thing? 1:05:19 1 hour, 5 minutes, 19 seconds Thank you. No uh so uh cet will be used by many 1:05:27 1 hour, 5 minutes, 27 seconds parts even the commercial air conditioning will use it. So the the factories produce and in a commercial air conditioning product even a room air 1:05:36 1 hour, 5 minutes, 36 seconds conditioner may be there. So so that's that's fine. Um so you cannot say commercial air conditioning is reported 1:05:45 1 hour, 5 minutes, 45 seconds and sorry a cassid air conditioning is reported only under commercial air conditioning. Uh it is reported if it is 1:05:53 1 hour, 5 minutes, 53 seconds part of that uh application it will be if it is part of room air conditioner it will be. So that is that is the first 1:06:02 1 hour, 6 minutes, 2 seconds part of it. Now I uh we I have I have stated this number of times that unitary 1:06:09 1 hour, 6 minutes, 9 seconds cooling products comprises room air conditioners as well as uh commercial air conditioning products and it is 1:06:18 1 hour, 6 minutes, 18 seconds difficult for us it will become a selective disclosure but if I'm to look at the industry volumes 1:06:27 1 hour, 6 minutes, 27 seconds uh based on my estimate uh I think the industry volumes 1:06:34 1 hour, 6 minutes, 34 seconds More or less the revenue grew by 17% and looser volumes would have degrone by 12%. 1:06:46 1 hour, 6 minutes, 46 seconds In Q2 all thank you. 1:06:55 1 hour, 6 minutes, 55 seconds Thank you. The next question is from the line of Sukrit Patil from Eyesight Fine Trade Private Limited. Please go ahead. 1:07:03 1 hour, 7 minutes, 3 seconds Good afternoon to the team. Uh I have a forward-looking question on Blue Star's long-term direction. Uh as more players, you know, are entering or may enter the 1:07:12 1 hour, 7 minutes, 12 seconds cooling and uh refrigerance uh refrigeration space. uh what is Blue Star doing to build a strong edge not 1:07:20 1 hour, 7 minutes, 20 seconds just through product range or uh distribution but something uh deeper like a way of working or thinking that 1:07:26 1 hour, 7 minutes, 26 seconds grows over time and makes the company uh you know stand out amongst the peers. Thank you. 1:07:33 1 hour, 7 minutes, 33 seconds No this question will be applicable for all companies all products. So the very first thing is that whether you are in a 1:07:42 1 hour, 7 minutes, 42 seconds growth segment and whether you have got leadership there and uh we we have been 1:07:48 1 hour, 7 minutes, 48 seconds a long-term player there and we have uh good reputation for being there if it is 1:07:56 1 hour, 7 minutes, 56 seconds so I when the industry is growing I should be growing uh if I keep doing the good things that's the first part of it 1:08:05 1 hour, 8 minutes, 5 seconds general the second part of it is that how you continue to grow or expand your 1:08:13 1 hour, 8 minutes, 13 seconds market share. Uh so you you you said that other than the product range product is very important that whether 1:08:21 1 hour, 8 minutes, 21 seconds your products are innovative, products are reliable, products are available at uh all price points and it is able to compete uh and overall competitiveness. 1:08:33 1 hour, 8 minutes, 33 seconds Therefore that that you have to continue to invest and build uh because in a fast growing uh segment there will be many 1:08:42 1 hour, 8 minutes, 42 seconds competitors all of them reputed all of them trying to grow their own market share. The third part is that uh the the 1:08:52 1 hour, 8 minutes, 52 seconds intangibles how you will excel. The important part is the customer 1:08:59 1 hour, 8 minutes, 59 seconds experience whether it is in uh in in uh delivering a product in installing a 1:09:06 1 hour, 9 minutes, 6 seconds product and lifetime how you look after the consumer and uh next is that how you 1:09:14 1 hour, 9 minutes, 14 seconds improve your operating uh efficiency through digitalization and uh therefore you you are able to improve your profitability. 1:09:28 1 hour, 9 minutes, 28 seconds uh lot of things together have to be uh orchestrated uh in order to maintain 1:09:35 1 hour, 9 minutes, 35 seconds your leadership position and uh grow and uh that this will be the this will be 1:09:42 1 hour, 9 minutes, 42 seconds same for all leaders in all categories and you stay ahead of the 1:09:51 1 hour, 9 minutes, 51 seconds curve in anything that if innovation is going to take place whether you are ahead of that whether energy level change is going to take place you are 1:09:58 1 hour, 9 minutes, 58 seconds ahead of the curve whether refrigerant change is happening whether you are ahead of it whether there is a digitalization whether you are ahead of 1:10:06 1 hour, 10 minutes, 6 seconds it AI whether you are ahead of it so that's how you play okay uh my last final question again 1:10:14 1 hour, 10 minutes, 14 seconds again a forwardlooking one on margins and cost planning you know as GST changes and weather disruptions you know keep on affecting demand how are you 1:10:22 1 hour, 10 minutes, 22 seconds planning to protect the margins and uh are there any smart internal method methods that you are going to be putting into place you know that helps you keep 1:10:30 1 hour, 10 minutes, 30 seconds the delivery quality high without putting any pressure on the profits. Thank you. 1:10:37 1 hour, 10 minutes, 37 seconds Yeah. So the broadly how you will weatherproof your business because uh because the weather can 1:10:46 1 hour, 10 minutes, 46 seconds spoil uh the game. So there is there is no doubt about it and uh so you will uh 1:10:53 1 hour, 10 minutes, 53 seconds each time this happens you will uh try to become smarter and uh I'm not claiming we have become smarter. Um the 1:11:02 1 hour, 11 minutes, 2 seconds question is whether there are other portfolios which will protect you which means the equal uh attention to B2B 1:11:09 1 hour, 11 minutes, 9 seconds products as well as B2C products. The second is even room air conditioner there is a significant amount of 1:11:16 1 hour, 11 minutes, 16 seconds consumers who are B2B within room air conditioner how you will enhance your share from those customers. 1:11:24 1 hour, 11 minutes, 24 seconds The um next part is uh connected with how you will uh have uh the inventory production management in such a manner. 1:11:39 1 hour, 11 minutes, 39 seconds uh you are you are able to manage uh the disruptions without uh saddled with a 1:11:46 1 hour, 11 minutes, 46 seconds huge inventory and that is beginning to happen because earlier we uh the industry was dependent on booster was 1:11:54 1 hour, 11 minutes, 54 seconds dependent on imports in which case the material would have arrived because you are now manufacturing in a big way you 1:12:02 1 hour, 12 minutes, 2 seconds can at least captail the production and component ecosystem is evolving so you are able to cartail and manage the component ecosystem. 1:12:13 1 hour, 12 minutes, 13 seconds Uh still whether you have mastered that I I I wouldn't uh uh say so uh and uh 1:12:21 1 hour, 12 minutes, 21 seconds because it it is that uh that 3 month window is very significant. Any business that is seasonal there will be some pain 1:12:30 1 hour, 12 minutes, 30 seconds if the season is not uh happening. But we continue to work on various initiatives. Uh like for example you 1:12:38 1 hour, 12 minutes, 38 seconds might have ended up advertising in IPL anticipating that there is going to be a summer season if summer sales you will be but next time you will be very clear. 1:12:49 1 hour, 12 minutes, 49 seconds I may not go ahead and incur the expenditure in advance u and suffer. I I 1:12:56 1 hour, 12 minutes, 56 seconds I will have to change my marketing expenses mix substantially in order to weatherproof uh ourselves. So these are the pictures. 1:13:08 1 hour, 13 minutes, 8 seconds Thank you for the guidance and I wish the entire team best of luck for Q3. Thank you. 1:13:15 1 hour, 13 minutes, 15 seconds Thank you very much ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Niklhani for closing comments. Over to you, sir. 1:13:27 1 hour, 13 minutes, 27 seconds Thank you very much, ladies and gentlemen. With this, we conclude this quarter's earnings call. Do feel free to revert to us in case any of your 1:13:35 1 hour, 13 minutes, 35 seconds questions were not fully answered, and we'll be happy to provide you additional details by email or in person. Thank you. 1:13:43 1 hour, 13 minutes, 43 seconds On behalf of Blueest Star Limited, that concludes this conference. Thank you for joining us today and you may now disconnect your lines.