Blue Star mulls AC price hike; plans Rs 200cr capex

Chennai: Blue Star has signalled a likely increase in air-conditioner prices, citing changes in energy-efficiency labelling norms from January 2026 and rising commodity costs, even as it plans a capital expenditure of about Rs 200 crore amid an optimistic demand outlook. "The increase in commodity prices has been unprecedented," said B Thiagarajan, managing director, Blue Star, while announcing the company's new range of room air conditioners for 2026. Commodity price increases alone have added about 8.5% to material costs. In addition, the energy label revision means that even on a like-to-like basis—such as comparing a 2025 five-star AC with a 2026 five-star model—prices are expected to rise by at least 5%, and in some cases 5%–8%. Combined, these factors could push up AC prices by around 13%–15%. However, the 10% GST reduction partly offsets this increase, meaning consumers may effectively pay about 5% more than last year, he said. Thiagarajan noted that 2025 turned out to be a failed summer, and the industry may end the current fiscal 5%–7.5% lower than FY25. However, he expects a strong rebound, with FY27 likely to see about 25% value growth and 20% volume growth over FY25. Compared with FY26, volume growth is expected at 25% and value growth at around 30%. "In line with our plan to gain market share, we aim for 25% volume growth and around 30% revenue growth in FY27," he said. Blue Star's market share currently stands at about 14.2%–14.3%, and the company aims to increase it to 14.5–14.75%. The company's current production capacity is about 1.4 million units, scalable to 1.8 million units. Blue Star plans a total capex of Rs 200 crore to Rs 210 crore, including Rs 40 crore for its Himachal Pradesh plant and Rs 30 crore for the Sri City facility in Andhra Pradesh, mainly for automation, maintenance, and upgrades. About Rs 70 crore will be invested in R&D, while Rs 60 crore to Rs 70 crore is expected to be spent on marketing and advertising.