Aeroflex Industries Limited — Q4 FY26 earnings call

Call held 6 May 2026

Management summary

Aeroflex reported a strong Q4 and FY26, achieving its annual targets with significant growth in revenue and EBITDA, driven by an improved product mix and the successful entry into liquid cooling solutions for data centers. The company expanded its capacity for skid assemblies and is focused on increasing utilization and market share in this high-growth segment. While facing some operational bottlenecks and an income tax demand, management expressed confidence in continued growth and margin expansion, supported by a robust order pipeline and strategic product development.

Highlights

  • Q4 FY26 Total Income grew 38% YoY to ₹126.5 crores, driven by improved product mix and value-added solutions.

  • Q4 FY26 EBITDA grew 59% YoY to ₹30 crores, with margin expanding 326 bps to 23.86%.

  • FY26 Total Income grew 17% YoY to ₹443.3 crores, meeting targets despite a weak Q1.

  • Successful entry into skid assemblies and advanced flow control solutions for data centers, contributing ₹21.2 crores in 4 months.

  • Capacity for skid assemblies scaled from 2,000 to 6,000 units/annum, with plans to reach 15,000 units/annum by next two quarters.

Concerns

  • Skid assembly production faced bottlenecks due to design aspects and stringent customer quality checks, impacting supply against demand.

  • An income tax demand of ₹40 crores related to a 2019 waiver was reopened, though management is confident of reversal.

  • Exports, while growing, saw their ratio decrease relative to domestic sales due to significant domestic growth from skid assemblies.

Key financials

2 periods

Q4 FY26

  • Total Income
    ₹126.5 Cr
    YoY +38%
  • EBITDA
    ₹30 Cr
    YoY +59%
  • EBITDA Margin
    23.9%
  • PAT
    ₹17.6 Cr
    YoY +57%

FY26

  • Total Income
    ₹443.3 Cr
    YoY +17%
  • EBITDA
    ₹99.7 Cr
    YoY +26%
  • EBITDA Margin
    22.6%
  • PAT
    ₹55.5 Cr
  • PAT Margin
    12.5%

What they filed

Q1 FY27: revenue up 72.6%, net profit up 171.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue95 100 92 84 111 +17%121 +21%126 +37%145 +73%
EBITDA20 22 19 15 26 +30%28 +27%30 +58%33 +120%
Net profit14 15 11 7 14 +0%16 +7%18 +64%19 +171%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Skid Assemblies
    ₹21.2 Cr FY26 Revenue (last 4 months)5% Share of FY26 Sales
  • Value-added Products (Assemblies, Fittings, Bellows)
    52% Share of Total Sales
  • Metal Bellows
    ₹8 Cr FY26 Revenue
  • Hyd-Air
    ₹31.64 Cr FY26 Revenue
  • Domestic Sales
    31% Share of Total Sales26% Previous Share

Order book

medium confidence

Composition

Mix 2 products
  • Skid Assemblies ₹21.2 Cr 72.6%
  • Metal Bellows ₹8 Cr 27.4%

Share of order book by product, derived from disclosed amounts

Pipeline

deal pipeline tcv

Pipeline for liquid cooling skids for the entire year from exclusive supplier, broken into quarterly POs.

Management has a long-term contract and pipeline for liquid cooling skids but cannot disclose specific order book values due to disclosure agreements. They expect significant growth in skid assemblies and metal bellows.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Capacity expansion for skid assemblies (from 6,000 to 15,000 units/annum)
    • Commissioning 2 robotic welding lines for assemblies
    • Investing in advanced manufacturing capabilities, including a new annealing furnace facility
    • Redeploying capital from miniature metal bellows to liquid cooling vertical
    Currently, we have scaled our skid assemblies capacity from 2,000 units per annum to 6,000 units per annum, and we are on track to further expand the same by the next two quarter to 15,000 skids per annum. [...] Now coming to our assemblies segment, we have continued to strengthen our capabilities through expansion of capacity and also have commissioned 2 robotic welding lines to enhance automation, precision and operational efficiency. In addition, we are also investing in advanced manufacturing capabilities, including a new annealing furnace facility targeted for commissioning by the end of this year. [...] we have redeployed the capital that we had allocated to miniature metal bellows to the liquid cooling vertical. So right now, as I speak, there will not be much capex that could happen in the next at least this financial year.
  • Dividend ₹0.4/share (final)
    I'm also happy to share that the Board has also recommended a final dividend of 20%, which translates to about INR0.40 per equity share of face value INR2 each.
  • Liquidity Liquidity disclosed Cash profit grew significantly to INR25.4 crores, reflecting strong cash generation.
    Our cash profit grew significantly to INR25.4 crores, which is a growth of 67% on a year-on-year basis, which reflects strong cash generation and improved operational performance of the company.

Guidance & targets

Revenue

  • FY27 Revenue Growth Revenue · FY27 · Medium confidence 35%+
    Yes. So, in terms of the business, right, the overall growth in the business, I think if you see in this quarter, we have grown by almost more than 35%, right? Our aim is to have a similar growth in the next few quarters as well.

    — Asad Daud

  • Skid Assemblies Revenue (at 75% utilization) Revenue · peak utilization · Medium confidence ₹325-330 crores
    Well, it's like -- it's difficult to give a number for that in the sense, so I can probably say that in terms of the business, I can say that at 75% capacity utilization, right? And like which as I said, could be the peak, we can expect a total revenue for the business to come in at about INR325 crores to about INR330-odd crores.

    — Asad Daud

  • Metal Bellows Revenue (at peak 85% utilization) Revenue · peak utilization · Medium confidence ₹80 crores
    I think at the peak utilization of the metal bellows, I think we would reach about INR80 crores at the top utilization, the maximum utilization.

    — Asad Daud

  • Base Business Growth Revenue · FY27 · High confidence 15-20%
    Base business growth would be somewhere in the range of about 15% to 20%.

    — Asad Daud

Margin

  • FY27 EBITDA Margin Margin · FY27 · High confidence 23%
    I think this year, the full year target is to have an EBITDA margin of around 23% in terms of EBITDA.

    — Asad Daud

  • Long-term EBITDA Margin Margin · annually (long-term) · Medium confidence 25%
    So -- and our aim is that ultimately, over the next couple of years, the EBITDA margin should reach to about 25% annually.

    — Asad Daud

Capacity

  • Skid Assemblies Capacity Utilization Capacity · by March 2027 · High confidence 60% of 15,000 units
    Well, our target would be that by the end of the financial year to reach to reach to at least 60% to 70%. So almost very close to the capacity that we are setting up. Our target would be to reach there by, say, March of next year.

    — Asad Daud

  • Metal Bellows Capacity Utilization Capacity · in 2-3 years · High confidence 50-60%
    We are looking to grow that significantly over the next two years so that we reach at least 50% to 60% of our capacity utilization.

    — Asad Daud

Market Share

  • Skid Assemblies Contribution to Total Business Market Share · current financial year · Medium confidence 20-22%
    I expect that the contribution of this business in the current financial year would be close to, I would say, anywhere between 20% to... 20% to 22% contribution of the entire business would be through skid assemblies.

    — Asad Daud

What to watch in Q1 FY27

Skid assembly production bottleneck resolution

next couple of months
Current Bottlenecks due to design and quality checks
Target Streamlined production, increased sales

Why it matters

Resolution of these bottlenecks is crucial for scaling the high-growth skid assembly business and meeting demand.

But yes, so I think we are hoping that over the next couple of months, I think that will be streamed out and smoothened out, I'm sorry.

Risks & concerns

  • Skid assembly production bottlenecks (design & quality checks)

    medium

    Design finalization and stringent customer quality checks are causing delays in production and supply of skid assemblies.

    Management acknowledged

  • Income tax demand of ₹40 crores

    medium

    An income tax demand related to a 2019 waiver has been reopened, but management is confident the appeal will be successful.

    Management confident of reversal

  • Geopolitical issues impacting exports

    low

    Despite geopolitical issues, particularly in West Asia, exports have continued to grow, though domestic growth has outpaced it.

    Management acknowledged

Q&A highlights

4 direct, 2 evasive
Order book for liquid cooling skids Evasive
So since right now, we are dealing with one specific or only one particular supplier due to disclosure agreements, we'll not be able to share the order book with them that we have.

Management could not disclose specific order book values for the new high-growth segment, limiting visibility for investors.

Asked by Nikunj Bhanushali

Bottlenecks in skid assembly production Direct
So the -- right now, the main bottleneck is from the design aspect, where the design which was initially to be provided by the principal is actually now being done by our entire team. So designing of the skid assemblies is the critical aspect here, where until and unless the skid assemblies is designed and finalized, the production cannot start for the same.

Identified key operational challenges (design and quality checks) impacting the execution pace of the new, critical skid assembly business.

Asked by Tej Patel

Income tax demand of ₹40 crores Direct
We have already we had done the necessary disclosures in both our financials and our income tax return. So we are confident that this is something, which will be -- which would come in our favor in the appeal that we are going to file.

Addressed a significant financial concern (equivalent to a full year's PAT) and management's confidence in its resolution.

Asked by Shwetha

New products in data center business and global expansion Partial
So, these are the new products that we are developing. Some of it are under development, some of it are under customer approval. And I'm hoping that from the next quarter, we'll start to see the sales coming in from these products as well. [...] See, in terms of the global market, our aim is to have or to start at least some supply of skid assemblies in the international market in the current financial year.

Provided insights into the product development pipeline and strategic intent for international market entry for skids, with an expectation of sales from next quarter.

Asked by Aman Vij

Competitiveness and pricing advantage Direct
I would say on a ballpark companies are on a landed cost will be definitely 25% to 30% cheaper. But that would depend a lot on product to product on market to market.

Quantified the company's cost advantage for bellows and hose assemblies, highlighting its competitive edge in international markets.

Asked by Ashok Shah

EBITDA margin for skid assembly business Evasive
We'll not be able to comment on specific EBITDA margins for specifically skid assemblies, reason being that we are working with just one customer right now. So, we'll not be able to share that on a public forum. But I can say that the overall margin for skid assemblies is in line with the average margins of the company.

Management could not provide specific margin details for the new high-growth segment due to a single customer, indicating a lack of granular financial transparency for this key area.

Asked by Akshay

Metal bellows margins vs. competitors and future potential Direct
So the margin in metal bellows is, like you mentioned, is significantly higher as compared to the hose assemblies. In terms of competitors, who have a higher scale of business in bellows, I think the margins with them obviously depends, first of all, on the customer segment that they have. Second of all, in which industry that they are supplying it. And obviously, like in any business, the higher the scale of the business, the higher the margins, right?

Explained the drivers behind higher margins in the metal bellows segment and the potential for further margin improvement by moving into higher-end applications like AI infrastructure and aerospace.

Asked by Jai Chauhan

3 min read 6 chapters

Detailed narrative

Strong Q4 & FY26 Performance Driven by Product Mix

Aeroflex reported a robust Q4 FY26, with total income growing 38% year-on-year to ₹126.5 crores. EBITDA for the quarter increased by 59% to ₹30 crores, resulting in a margin of 23.86%, an improvement of 326 basis points. For the full fiscal year 2026, total income stood at ₹443.3 crores, a 17% growth year-on-year, and EBITDA reached ₹99.7 crores, up 26% from the previous year, with a margin of 22.6%. This performance was attributed to an improved product mix and growing contribution from value-added solutions, despite a weak first quarter.

Strategic Entry into Liquid Cooling Solutions for Data Centers

A significant highlight for FY26 was the successful entry into skid assemblies and advanced flow control solutions for high-performance liquid cooling applications, specifically targeting data centers and AI infrastructure. This new segment contributed approximately ₹21.2 crores in sales over the last four months of FY26, accounting for 5% of the total sales. The company showcased its portfolio at the Data Center World Exhibition, reinforcing its focus on next-generation thermal management technologies. Management aims for this segment to contribute 20-22% to the total business in the current financial year.

Capacity Expansion and Product Development

Aeroflex has aggressively expanded its manufacturing capabilities, scaling skid assembly capacity from 2,000 units per annum to 6,000 units per annum, with plans to further increase it to 15,000 units per annum within the next two quarters. The company also commissioned two robotic welding lines to enhance automation and precision. Additionally, investments are being made in a new annealing furnace facility, expected by year-end. The product development pipeline includes over 16 products focused on high-growth segments, with new hose assemblies for data centers and other advanced flow components expected to contribute sales from the next quarter.

Domestic Market Growth and Export Dynamics

The domestic sales contribution increased significantly to 31% of total sales in FY26, up from 26% previously, primarily driven by the traction from skid assemblies and Hyd-Air. While exports also grew in double digits during Q4, the substantial growth in domestic sales led to a shift in the overall sales mix. Management noted that for bellows and hose assemblies, the company is 25-30% cheaper on a landed cost basis compared to international alternatives, highlighting its competitive advantage in global markets.

Outlook and Guidance for FY27

For FY27, Aeroflex targets a similar revenue growth rate of over 35% as seen in Q4 FY26, with an EBITDA margin of around 23%, aiming for 25% annually in the long term. The company expects to achieve 60% utilization of its 15,000-unit skid assembly capacity by March 2027, which could translate to ₹325-330 crores in revenue at 75% utilization. The base business is projected to grow by 15-20%. Hyd-Air's current 60% utilization is planned for internal consumption to support high-end applications.

Operational Bottlenecks and Risk Mitigation

The company acknowledged bottlenecks in skid assembly production, primarily stemming from the design phase and stringent customer quality checks required by end-users. Management is working to streamline these processes, expecting improvements in the coming months. A significant concern raised was an income tax demand of ₹40 crores related to a 2019 waiver, which management is confident will be reversed upon appeal. Despite geopolitical issues, particularly in West Asia, the company's exports continued to grow, demonstrating resilience.

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