Hyderabad, Mar 24 (TNT): Blue Star Limited on Tuesday said the room air conditioner industry is likely to see a 5 per cent decline in volumes in FY26, as higher prices and weak consumer sentiment weigh on demand after last year’s strong growth.
AC prices are expected to rise by 5–7 per cent due to an 8–8.5 per cent increase in raw material costs and an additional 4 per cent impact from new energy efficiency norms, partly offset by GST reductions, Mohit Sud, Group President, Unitary Cooling Products, Blue Star, told reporter on the sidelines of the launching of comprehensive new range of unitary cooling products including a premium ‘Iconia’ range in a Midnight Silver finish, targeting high-end consumers here.
The industry had recorded a robust 20 per cent growth in FY25, taking total volumes to around 15 million units, driven by strong summer demand, he said.
Flagging demand risks, he said said there is limited precedent to gauge consumer response to such price hikes, particularly for discretionary purchases like air conditioners amid broader economic uncertainties.
Looking ahead, Blue Star expects a recovery in FY27, projecting around 15 per cent volume growth supported by structural drivers such as rising incomes and increasing AC penetration, he said.
He said southern markets are likely to remain relatively resilient due to higher ncome levels and a greater share of premium products, while northern markets may be more price-sensitive.
Blue Star currently has a pan-India market share of 14.25 per cent and expects it to rise to 14.75 per cent, with strong presence in southern markets such as Telangana and Andhra Pradesh, he informed.
Exports contribute about 8–10 per cent to the company’s overall business, with presence across markets including the US, Middle East and SAARC region,he said.
Industry localisation has improved to around 65 per cent by value, though key technologies such as compressors continue to rely on global suppliers. Full indigenisation may take another four to five years, he said.
On costs, Blue Star said inputs such as refrigerants are sourced domestically but prices have risen in line with commodity inflation. The company also uses liquefied natural gas (LNG) in limited quantities for manufacturing processes and is monitoring supply amid possible curbs.
Its Sri City facility in Andhra Pradesh has a capacity of about 8 lakh units per annum, scalable to 12 lakh units, with no immediate plans for expansion, he added.
TNT TS
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