Aeroflex reported its strongest ever quarterly performance in Q3 FY26, driven by robust growth in value-added products and strategic entry into liquid cooling solutions for data centers. The company is expanding capacity across key segments and remains debt-free, though some projects like miniature bellows have been rationalized due to market conditions and tariffs. Management is optimistic about future growth, especially from the EU market post-FTA.
vs Q4 FY26
| Metric | Value | YoY |
|---|---|---|
| Total Income (Q3 FY26) | ₹121 Cr | +21.0% YoY |
| EBITDA (Q3 FY26) | ₹28.5 Cr | +28.0% YoY |
| EBITDA Margin (Q3 FY26) | 23.6% | — |
| PAT (Q3 FY26) | ₹16.5 Cr | +8.0% YoY |
| PAT Margin (Q3 FY26) | 13.5% | — |
| Total Income (9M FY26) | ₹317 Cr | — |
Segment Breakdown
Composition
Pipeline
deal pipeline tcvPipeline for liquid cooling solutions
"Management noted a healthy order book and strong customer relationships, particularly in the global data center and AI infrastructure market."
| Category | Headline | |
|---|---|---|
Capex | ₹97 crores cut — rationalization of Miniature Metal Bellows project due to phased demand visibility and optimization of internal resources | |
Debt | Gross ₹0 crores · Net ₹0 crores · 0.0x EBITDA | |
Liquidity | Cash ₹20 crores |
| Category | Target | Priority |
|---|---|---|
| Profitability | EBITDA Margin→up to 25% | Medium |
| Capacity | Bellows business annual run rate→INR 36 crores | Medium |
| Capacity | Bellows plant peak utilization revenue→INR 85 crores | Medium |
| Capacity | Liquid cooling peak utilization revenue→INR 350 crores | Medium |
| Capacity | Skid assembly capacity→15,000 units per annum | High |
| Capacity | Balance hose capacity commissioning→2.5 million meters | High |
| Operations | Completion of process automation→completed | High |
| # | Metric | |
|---|---|---|
| 01 | Balance hose capacity commissioning | |
| 02 | Skid assembly capacity expansion completion | |
| 03 | Process automation completion | |
| 04 | Hyd-Air capex announcement | |
| 05 | EU FTA impact on export growth |
| Severity | Risk |
|---|---|
medium | Tariff-related headwinds in export markets (especially US) Tariffs are impacting new customer onboarding and have caused delays in the bellows project, though Q3 export business grew 30% YoY despite this. Management |
low | Raw material price volatility While historically a concern, management states prices have been more or less stable with minor fluctuations over the last couple of years, and they use back-to-back planning and long-term contracts. Analyst |
Aeroflex reported its highest ever quarterly revenue, EBITDA, and PAT in Q3 FY26. Total income for the quarter stood at INR 121 crores, marking a 21% year-on-year growth. EBITDA reached INR 28.5 crores, a 28% increase year-on-year, resulting in an EBITDA margin of 23.6%. PAT grew 8% year-on-year to INR 16.5 crores, with a PAT margin of 13.5%. For the nine months of FY26, value-added products, including assemblies, fittings, bellows, and skid assemblies, contributed 54% to total sales.
A key strategic highlight for the quarter was Aeroflex's entry into high-performance liquid cooling solutions for data centers and AI infrastructure. The company completed its first commercial dispatch of advanced flow control components and skid assemblies for this application. To support rising demand, skid assembly capacity is being expanded to 15,000 units per annum, with completion expected by June 2026. A new plant at Chakan in Pune is also being set up to augment production capacity for skid assemblies.
Aeroflex continued to enhance its manufacturing capabilities, adding 1 million meters of hose capacity in the quarter, bringing the total installed capacity to 17.5 million meters per annum. The remaining 2.5 million meters of hose capacity are expected to be commissioned by Q2 of the next financial year. Investments in process automation, including robotic and automated welding stations and an annealing plant, are progressing as planned and are targeted for completion by the end of the current calendar year.
The capital expenditure for the Miniature Metal Bellows project has been rationalized from an earlier planned outlay of INR 23 crores to INR 10.5 crores. This decision was based on updated market assessment, phased demand visibility, and optimization of internal resources. Accordingly, the proposed installed capacity for this project has been revised from 240,000 pieces per annum to about 50,000 pieces per annum, which is deemed sufficient for near-term demand and allows for phased scaling.
Despite tariff-related headwinds, the company's quarterly export business grew 30% year-on-year in Q3 FY26. Exports currently constitute about 74% of total business, with approximately 85-95% coming from the EU and USA combined. Management anticipates higher traction from the EU sector in the coming years due to the recently announced Free Trade Agreement. In the domestic market, significant uptick was observed from the steel industry, ports and terminal industry, and the railways industry (via Hyd-Air subsidiary).
The company reported approximately INR 36 crores in capex for the first nine months of FY26, with INR 9 crores allocated to liquid cooling, INR 5 crores to bellows, and INR 22 crores to hoses, assemblies, and welding. The overall planned capex, including working capital, is around INR 97 crores. Aeroflex maintains a debt-free status, with approximately INR 20 crores cash in hand as of December 31. Management does not plan to raise any debt as of now.
Management emphasized the company's competitive moat, particularly in liquid cooling solutions. This moat is attributed to deep engineering capabilities, R&D, and over 15-20 years of experience in flow control. The expertise in design, conversion of design to finished product, and proprietary software for simulation are highlighted as difficult-to-replicate advantages, ensuring customer stickiness and sustained growth.