Why this analyst prefers Blue Star in the consumer durables space

With the summer heat intensifying, room air conditioner (RAC) stocks are expected to see strong demand.  Praveen Sahay, Research Analyst at PL Capital, expects major players like Voltas, Blue Star, and Lloyd to record 20-25% growth in the January-March 2025 quarter (Q4FY25).

Blue Star, he says, appears best positioned in the space due to its in-house manufacturing, improved market penetration, and stable margins.

He sees strong growth potential in the sector. “Room air conditioner growth is quite huge or strong. Summer so far has been good, and the way forward, the severity of the summer is expected to be very good. Definitely, the volume growth for the industry is expected to come in.”

While Voltas

is likely to witness strong volume growth, its margins could be under pressure.

“The fourth quarter and the quarter one is seasonally better quarters, and in that, if the Voltas is not able to pass on the prices increased cost, then definitely that's one of the concerns.”

Beyond air conditioners, fans are another seasonal product seeing strong demand. Prices across brands have risen by 2-5% in January-March 2025 quarter, which, coupled with high dealer inventories, suggests solid primary sales.

Companies like Crompton and Havells are benefiting the most, as they were operating from a high base last year. With price hikes and strong sales, their electrical consumer durables (ECD) portfolio is expected to show strong numbers for the quarter.

Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.