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Blue Star Q1 profit falls 15 per cent despite double-digit revenue growth
Cooling products maker reports higher sales as rising costs weigh on quarterly earnings
Mumbai: Blue Star Limited reported a decline in first-quarter profit despite posting double-digit revenue growth, as higher operating expenses offset strong demand across its cooling products and commercial air conditioning businesses.
The company posted consolidated revenue from operations of Rs 3,377.9 crore for the quarter ended June 30, up 13.3 per cent from Rs 2,982.3 crore in the corresponding period last year. Total income increased to Rs 3,398.7 crore, including Rs 20.8 crore in other income.
However, net profit declined 15.2 per cent to Rs 102.5 crore from Rs 120.8 crore a year earlier, as total expenses rose 15.5 per cent to Rs 3,273.1 crore.
Profit before tax stood at Rs 134.6 crore, aided by an exceptional gain of Rs 9.2 crore from the sale of property. Excluding the exceptional item, profit before tax was Rs 125.6 crore.
The increase in expenses was led by higher material costs, which rose to Rs 2,141.3 crore, while purchases of stock-in-trade stood at Rs 493 crore. Employee benefit expenses came in at Rs 249.4 crore, depreciation and amortisation at Rs 56.6 crore, finance costs at Rs 13.5 crore, and other expenses at Rs 307.4 crore.
On a standalone basis, revenue from operations increased to Rs 3,198.3 crore from Rs 2,846.6 crore a year earlier. Standalone net profit, however, fell sharply to Rs 69.4 crore from Rs 108.6 crore, while earnings per share stood at Rs 3.37.
Among business segments, the Unitary Products division, which includes room air conditioners and cooling appliances, remained the largest contributor with revenue of Rs 1,689.3 crore, up from Rs 1,499.4 crore a year ago. Segment profit, however, declined to Rs 49.7 crore from Rs 87.5 crore, reflecting pressure on margins.
The Electro-Mechanical Projects and Commercial Air Conditioning Systems business reported revenue of Rs 1,625.1 crore, up from Rs 1,412.5 crore, while segment profit remained largely stable at Rs 110.2 crore.
The Professional Electronics and Industrial Systems segment reported revenue of Rs 63.6 crore, lower than Rs 70.4 crore in the year-ago quarter, although segment profit improved to Rs 9.6 crore.
Despite the decline in earnings, Blue Star maintained a strong balance sheet. The company remained virtually debt-free with a debt-to-equity ratio of zero, while net worth increased to Rs 3,533.7 crore. The current ratio stood at 1.36, though operating margin narrowed to 5.18 per cent from 6.71 per cent a year ago, and net profit margin declined to 3.02 per cent from 4.03 per cent.
Separately, the board approved the appointment of Nikhilesh Panchal as an additional independent director for a five-year term beginning August 14, subject to shareholder approval. Panchal brings experience in mergers and acquisitions, capital markets, foreign exchange regulations and corporate governance.
While rising input and operating costs weighed on profitability during the quarter, Blue Star’s healthy revenue growth across its core businesses and strong balance sheet indicate that demand for cooling and commercial air conditioning solutions remains resilient.
