𝗟𝗼𝗻𝗴 𝗧𝗲𝗿𝗺 ®™

552🚀Long term level hit

Good morning

Kansai Nerolac 120-180 Expected level 220 Support 100

Key strategy

Positive outlook for automotive sector

Growth plan

Corporate overview

Kansai paint company details

Good morning

Good morning

Blue Star Limited 1450-1570 Expected level 1900 Support 1300

#COMPANY #OUTLOOK • The company aims to grow faster than the market in its core businesses of air conditioning and commercial refrigeration. The company is also planning to grow revenue from adjacencies such as Air Coolers, MEP services for Water Supply projects, and Railway Electrification. It will consolidate its position in the Middle East, Africa and South Asia regions with deeper market penetration and the introduction of innovative products and solutions. • It aims to expand the global footprint by entering North America and Europe as Original design and manufacturing (ODM) solutions provider. • It aims to strengthen its R&D and innovation capabilities and deploy total cost management programme across various businesses and functions. • The company targets to achieve 15% market share in FY25 in the RAC segment. • There is enhanced focus on increasing penetration in Tier 3/4/5 cities and developing more executive dealers there. • They have guided for a margin of ~7%-7.5% for electro-mechanical projects & commercial air conditioning systems segment and ~8%-8.5% for unitary products and commercial refrigeration products segment. • Capex for the upcoming 3 years will be in the range of ~₹750-₹800 crore per year. • The Sri City Plant produced more than 300,000 air conditioners in FY24 and is on course to double that production in the current fiscal year. • It plans to invest over ₹50 cr in advertising during the upcoming summer season.

#COMPANY #POTENTIAL • Indian appliances and consumer electronics industry stood at US $9.84 billion in 2021 and is expected to more than double to reach ₹1.48 lakh cr (US $21.18 billion) by FY25. (Source : IBEF) • The Room Air Conditioner Market (RAC) grew 45% over FY22 in value terms. As a result, the overall market size grew to ₹22,750 cr in FY23, of which the market for central air conditioning, including central plants, packaged and ducted systems, and VRF systems was around ₹4,250 cr, while the market for room air conditioners comprised the balance ₹18,500 cr. • The overall AC industry (both residential and commercial), currently valued at around ₹27,500 cr in FY24, is likely to double in the next four years. In FY24, of which the market for central air conditioning, including central plants, packaged and ducted systems, and VRF systems was around ₹4,500 cr, while the market for room air conditioners comprised the balance ₹23,000 cr. • In FY23, the Indian RAC has grown to 8.4 million units and 10 million units in FY24. • The demand growth in the segment is expected on the back of rising urbanization, increasing disposable income of the middleclass population, easy consumer credit, wide usability of online sales and decreasing replacement cycle. • As a part of the Atmanirbhar Bharat Program, the Government has announced Production Linked Incentive (PLI) Schemes for many product categories, the ecosystem for air conditioning components is developing fast in the country. In pursuit to secure their supply chain, European and American players are looking at reliable and capable manufacturers outside China. • E-commerce, as a distribution channel, has been witnessing phenomenal growth owing to the impetus provided by the Pandemic, thereby advancing its penetration in the country by 12-18 months. The Indian E-commerce market is expected to grow 21% to ₹58,580 cr (US $75 Billion) in 2022 and is likely to reach ₹1,01,547 cr (US $130 Billion) by 2025 growing at a CAGR of over 20%. The number of internet connections in 2021 increased significantly to 830 million, driven by the ‘Digital India’ programme.

#ROCE In FY24, capital employed during the year was ₹2,731 cr and PBIT ₹615 cr and the ratio was ~26%. ₹665 cr was employed in the electromechanical projects and commercial air conditioning systems and ~ ₹1,251 cr in unitary products segment whereas remaining amount was in others.

#PAT #MARGIN In FY24, the PAT margin was 4.3%. In 9M FY25, the PAT margin was at 5%.

#EBITDA #MARGIN In FY24, EBITDA margin was 6.9% whereas segmental EBIT margin for Electro-Mechanical Projects and commercial air conditioning systems was 7%, Unitary products was 7.8% and for Professional electronics and industrial systems it was 14%. In 9M FY25 EBITDA margin was 7.5% but segmental EBIT margin for Electro-Mechanical Projects and commercial air conditioning systems was 8.5%, Unitary products and commercial refrigeration at 8.4% Professional electronics and industrial systems at 8.1%.