It is the season of smaller companies outperforming larger ones across sectors. The trend is visible in the air conditioning (AC) space as well. While Voltas (with market capitalisation of Rs 12,490 crore) has delivered better returns compared to BSE Sensex (17 per cent versus 10 per cent this year, respectively), Blue Star, with smaller market capitalisation of Rs 5,000 crore has delivered far superior gains (up 33 per cent this year). Both stocks are near their all-time highs. Analysts say outperformance of Blue Star over Voltas may continue, given the strong fundamentals and growth rates.
In June quarter, while domestic AC sector grew 27 per cent, both companies grew ahead of the market. But, Blue Star’s core room AC segment (61 per cent of total revenues) grew 38 per cent over year, while Voltas’s core vertical — unitary cooling products including room ACs, inverter ACs — grew 29 per cent over year.
With sales volumes increasing rapidly for Blue Star, it widened its market share to 10.6 per cent in June quarter from less than 10 per cent a year ago. Voltas is the leader in ACs, with 22 per cent market share, and plans to maintain it at current levels in the medium term, the company said. On the other hand, Blue Star aims to grow ahead of the market by at least 10 percentage points, and this would result in further increase in its market share.