💰 Financial Performance

Revenue Growth by Segment

Hyd-Air subsidiary sales grew 500% from INR 1.5 Cr to INR 9 Cr in Q2 FY26. The value-added assembly segment contributed 53% of total sales, aligning with high-margin targets.

Geographic Revenue Split

Exports contributed 75% of total revenue in FY25. Domestic sales contribution improved from 19% to 27% in H1 FY26, driven by standalone growth and Hyd-Air integration.

Profitability Margins

Gross margins improved in Q2 FY26. Net Profit margin for H1 FY26 was 10.93% (INR 21.4 Cr), while Cash PAT margin stood at 17.08% (INR 33.43 Cr).

EBITDA Margin

EBITDA margin reached a record 23.47% in Q2 FY26, up 136 bps YoY from 22.10%. H1 FY26 EBITDA margin was 21.39% (INR 41.87 Cr).

Capital Expenditure

Production capacity was expanded by 22.22% to 16.5 Mn mtrs in FY25. IPO proceeds of INR 351 Cr were utilized for debt prepayment and working capital.

Credit Rating & Borrowing

IVR BBB- (Under watch with positive implications) was withdrawn in Oct 2023 after the company prepaid all outstanding debt using IPO proceeds.

⚙️ Operational Drivers

Raw Materials

Stainless Steel (SS), Bronze, Inconel, Monel, and PTFE represent the primary raw materials, with material costs totaling INR 65.68 Cr in Q2 FY26 (59.2% of revenue).

Import Sources

Sourced from global markets with a strategic focus on supporting growth in the Americas and Europe.

Key Suppliers

Not disclosed in available documents.

Capacity Expansion

Current installed capacity is 16.5 Mn mtrs (FY25), up from 13.5 Mn mtrs. Capacity utilization stands at 75.14%.

Raw Material Costs

Cost of materials consumed was INR 65.68 Cr in Q2 FY26, up 7.7% YoY, while revenue grew 16.7%, indicating improved procurement efficiency.

Manufacturing Efficiency

Capacity utilization is 75.14%. Automation and process optimization are being implemented to improve productivity and sustain 23%+ margins.

Logistics & Distribution

Not disclosed in available documents.

📈 Strategic Growth

Expected Growth Rate

16-18%

Growth Strategy

Growth will be achieved through the launch of the Liquid Cooling segment (INR 16 Cr orders secured), increasing the share of 53% value-added assemblies, and inorganic expansion in Americas/Europe.

Products & Services

Stainless steel corrugated flexible hoses, braided/non-braided hoses, assemblies, fluid control solutions, and liquid cooling systems.

Brand Portfolio

Aeroflex, Hyd-Air Engineering.

New Products/Services

Liquid cooling systems for data centers/high-performance computing launch in Q3 FY26 with an initial order book of INR 16 Cr.

Market Expansion

Focussed thrust on the Americas and Europe for FY 2024-25, alongside domestic expansion in Railways and Shipbuilding via Hyd-Air.

Market Share & Ranking

Metal bellows market projected to reach USD 5,607.7 Mn by 2035 (6.4% CAGR); Aeroflex is positioning for global leadership in metallic flexible hoses.

Strategic Alliances

Sole supplier for a major liquid cooling project in India, with potential for international customer delivery.

🌍 External Factors

Industry Trends

The metal bellows market is growing at a 6.4% CAGR, evolving toward specialized applications in Aerospace, Semiconductors, and Green Energy.

Competitive Landscape

Intense competition in standard hose segments is mitigated by moving into the 53% value-added assembly segment.

Competitive Moat

Moat is sustained by sole-supplier status for critical cooling projects, NABL-accredited R&D, and high switching costs for specialized metallic assemblies.

Macro Economic Sensitivity

Sensitive to global industrial capex and the shift toward high-performance computing/data centers driving cooling demand.

Consumer Behavior

Increasing global demand for sustainable cooling systems and high-performance computing is driving the pivot to liquid cooling.

Geopolitical Risks

US-India trade tariffs are a primary risk, causing shipment deferments in Q2 FY26.

⚖️ Regulatory & Governance

Industry Regulations

Complies with TUV NORD Germany accreditation and NABL standards for R&D and manufacturing.

Environmental Compliance

Sustainability initiatives are integrated to enhance operational efficiency, though specific costs are not disclosed.

Taxation Policy Impact

Effective tax rate is approximately 27.8% based on Q2 FY26 PBT of INR 19.72 Cr and PAT of INR 14.23 Cr.

Legal Contingencies

Not disclosed in available documents.

⚠️ Risk Analysis

Key Uncertainties

Impact of international tariffs on export volumes (75% of revenue) and the timing of revenue realization for deferred US shipments.

Geographic Concentration Risk

High concentration in exports (75%), with North/South America and Europe being key growth drivers.

Third Party Dependencies

Not disclosed in available documents.

Technology Obsolescence Risk

Mitigated by R&D focus on new materials (Inconel, Monel) and transition to liquid cooling for the semiconductor industry.

Credit & Counterparty Risk

Strong liquidity with a current ratio of 2.89 and significant cash generation (Cash PAT of INR 20.33 Cr in Q2 FY26).