Gradual resumption of economic activity is likely to revive Blue Star

The air conditioning and allied products maker, Blue Star Ltd, saw its share price surge by 12 per cent on BSE. This is on the back of just 6 per cent gains in the benchmark index-Sensex. The move is considered to be clearly against the industry and business triggers that the company is seeing.

Its products are dependent on the commercial as well as the retail (household) demand. The company has a presence in water purifiers, commercial refrigeration, and commercial air conditioning business systems, which are fully dependent on the revival in the economic activity. As the lockdown led to a temporary shutdown of medium-sized offices, educational institutions, entertainment as well as banquet halls, the company got hit on both the fronts i.e. on new order booking and billing. Overall, the company reported a decline of 66 per cent in billing.

The management, in its recent commentary with investors, said that the impact of the pandemic on water purifier business is above expectation. This was led by an e-commerce channel on establishing brand and customer recall. The company also added that due to the rising concern over health and immunity, the demand for water purifiers grew, ultimately leading to the growth of this segment.

The company stated that it has also bagged some orders from prominent firms such as Patna Medical College, ThyssenKrupp, and MMRCL COVID Hospital, which increases its visibility of receivables on its balance sheet.