Blue Star Ltd

- Blue Star is planning to raise funds primarily through equity via a Qualified Institutional Placement (QIP) to ensure an optimum capital structure for future growth. - The Board has approved raising up to Rs. 1,000 Cr, with flexibility to raise through debt or equity, though equity is preferred. - Current gross debt is around Rs. 600 Cr, net debt approx Rs. 283 Cr as of June 2023. - The capital raise is intended to fund around Rs. 750 Cr CAPEX over the next 2-3 years, support working capital needs, retire some high-cost debt, and strengthen the balance sheet for future debt capacity. - The company wants to avoid overleveraging, preferring a net debt-to-EBITDA ratio below 0.25-0.3. - Debt financing for working capital will continue alongside the equity raise. - Fundraising is a long-term strategy for scaling up manufacturing capacity expansion, including new investments like Sri City 2 facility.

- Blue Star plans approximately Rs. 750 Cr CAPEX over the next 3 years, mainly in FY24 and FY25, with lower investments expected in FY26. - Investments include expanding manufacturing capacity at Sri City from 300,000 units to 600,000 units, and further phases to reach 1.2 million units. - Additional land (40 acres) acquired at Sri City 2 for future expansion focused on commercial air conditioning for domestic and export markets. - Investments also planned in sub 300-litre capacity at Wada facility. - Fundraise approved (up to Rs. 1,000 Cr) primarily for equity to strengthen the balance sheet for future growth and CAPEX needs. - Working capital requirements to increase with scale; the company aims to optimize capital structure without overleveraging. - Commitment to R&D investments aligns with product portfolio expansion and export market requirements, with a strategy update expected in six months.

- Industry room air conditioner market size expected to grow from 8 million units to 10 million units in FY24 and to 13 million by FY25. - Blue Star aims to grow its room AC volume from 8 lakh units last year to at least 10 lakh units in FY24. - Full-year unitary product segment growth estimate is revised to 10-15%, down from earlier higher targets. - Festival season expected to show better sales than last year, helping revive demand. - Commercial refrigeration and electro-mechanical projects segments expected to continue robust growth driven by infrastructure and capex cycle. - Long-term target of steady EBIT margin at 8-8.5% amid evolving competitive landscape. - Export market development (Europe, North America) plans underway, but significant order wins expected only in 5-10 years. - Capacity expansions (Sri City phases 2 and 3) aligned with growth plans, supported by Rs. 750 Cr investments over next 2-3 years.

- Blue Star anticipates steady growth in Unit Air Conditioners (UCP) segment around 10-15% for FY24, with Blue Star growing similarly. - EBIT margins for UCP are expected to be maintained at 8% to 8.5% on a full-year basis, adjusting for increased competitive landscape and capacity expansion. - The company foresees overall revenue growth driven by continued investments in infrastructure, corporate capex, healthcare, and other sectors. - Carried-forward order book has grown 37.4% to Rs. 5,359 Cr, indicating strong future project revenues. - Net profit grew 12.2% in Q1FY24, with operating scale and better realizations contributing to improved EBITDA margin of 6.5%. - Blue Star expects capacity expansions (Rs. 750 Cr CAPEX over 3 years) to support scaling operations and profitability. - Long-term balanced capital structure and investments in R&D aim to sustain future earnings growth and EPS improvements.

- Carried-forward order book as of June 30, 2023, was Rs. 5,359.05 Cr, up 37.4% from Rs. 3,901.48 Cr as of June 30, 2022. - Carried-forward order book as of March 31, 2023, stood at Rs. 5,042.27 Cr. - Electro-Mechanical Projects business order book was Rs. 4,038.14 Cr as on June 30, 2023, growing 45.4% from Rs. 2,777.45 Cr as on June 30, 2022. - Order inflow for Q1FY24 was Rs. 1,224.65 Cr, slightly lower than Rs. 1,365.90 Cr in Q1FY23. - Pending order book mainly includes Electro-mechanical projects and Commercial Air Conditioning ducted systems (inverter ducted and VRF). - Orders are of high quality, strictly reviewed by the Risk Committee. - Pipeline remains healthy with enquiries from manufacturing, data centers, healthcare, hospitality, railway electrification, metro railway, and Tier 3-5 towns.