Aeroflex Industries , a leading manufacturer of stainless steel flexible hoses and assemblies, reported a 6% year-on-year decline in total income for Q1, amounting to INR 84.67 crores. The company attributed this dip to external macroeconomic factors, particularly tariff issues affecting export customers.

Financial Performance

Despite the revenue decline, Aeroflex maintained a solid financial position:

• EBITDA stood at INR 15.80 crores with an 18.68% margin
• Profit after tax was INR 7.10 crores, representing an 8.46% margin
• The hoses and assemblies segment continued to deliver strong margins in the range of 22% to 23%

The company's Managing Director, Asad Daud, explained that the revenue decline was primarily due to tariff increases, which rose from 3.5% to 10% for their products. This led to temporary procurement delays from export customers.

Domestic Growth and Market Expansion

While exports faced challenges, Aeroflex's domestic business grew over 30% during the quarter. The company is actively working to diversify its market presence:

• Domestic sales now contribute 28% to overall revenue, up from 15-16% a year ago
• Aeroflex remains the largest exporter of hoses and assemblies from India
• The company is the market leader in both domestic and export markets

Entry into Data Center Cooling Solutions

In a significant move, Aeroflex has entered the next-generation cooling technology market for data center infrastructure:

• Signed a long-term agreement with a U.S. corporation having over USD 50 billion market capitalization
• Received first order worth INR 7.80 crores for providing cooling solutions to data centers
• The order involves developing advanced flow control components for cooling systems
• This marks Aeroflex's entry into a market estimated at $4.40 billion, growing at a CAGR of 20%

Other Business Segments

Aeroflex is also seeing growth in other segments:

• Metal bellows contributed INR 1.30 crores in revenue for Q1
• The company expects metal bellows and Hyd-Air Engineering to contribute 10-15% to overall sales on a yearly basis

Future Outlook

Despite the Q1 challenges, Aeroflex maintains a positive outlook:

• Management expects the tariff impact to be temporary
• The company maintains EBITDA growth guidance of over 20% for the full year
• Margins are expected to normalize at 21-22% as new capacity utilizations improve
• Aeroflex aims to increase EBITDA margins from 20% to 25% over the next 4-5 years

Asad Daud commented, "We remain confident that the impact seen in this quarter will be offset over the remainder of the year. The long-term demand for our products continues to remain strong, and our strategic roadmap is firmly intact."

As Aeroflex Industries navigates through temporary challenges, its entry into the high-growth data center cooling market and strong domestic performance indicate promising opportunities for future growth and diversification.

Aeroflex Industries has announced a strategic expansion into the global data centre cooling market, marking a significant move into next-generation industrial innovation. The company is also increasing its capacity in high-margin bellows products and integrating operations of its subsidiary, Hyd-Air Engineering Pvt Ltd.

Entry into Data Centre Cooling

In a major breakthrough, Aeroflex's Bellow division has secured a long-term agreement to supply liquid cooling solutions for data centres with a listed U.S. corporation boasting a market capitalization of over $50 billion. This move positions Aeroflex at the forefront of next-generation cooling solutions for the rapidly growing data centre infrastructure ecosystem.

The company has already received its first order under this global agreement, valued at ₹7.80 crore. This initial order focuses on developing advanced flow control components for high-performance thermal management systems, validating Aeroflex's R&D capabilities and technical expertise.

Expansion in High-Margin Bellows

Aeroflex is significantly expanding its capacity in metal bellows production:

• Current capacity: 120,000 pieces per annum
• Planned capacity: 300,000 pieces per annum
• Product range: Diameters from 50mm to 3,000mm

Additionally, the company is venturing into miniature metal bellows:

• Planned capacity: 240,000 pieces annually
• Diameter range: 10mm to 50mm
• Target completion: March 2026

These expansions are expected to cater to various industries including aerospace, robotics, semiconductors, and clean energy sectors.

Hyd-Air Integration and Facility Upgrades

The integration of Hyd-Air Engineering is progressing well, with substantial upgrades to its quality lab and R&D centre. Advanced CNC machines have been ordered and are scheduled for timely installation, which is expected to enhance production capabilities and operational efficiency.

Financial Performance

For the quarter ended June 30, 2025 (Q1 FY26), Aeroflex reported:

While there was a marginal decline in revenue compared to the previous year, the company attributes this to recent changes in tariff structures and temporary buyer uncertainty.

Management Commentary

Asad Daud, Managing Director of Aeroflex Industries, commented on the results: "The underlying demand for our products remains robust, and we view this dip as transient. Our planned capacity expansion remains firmly on track, positioning us well for sustained growth, operational efficiency, and enhanced service capabilities across geographies and sectors."

Aeroflex's strategic expansion into the data centre cooling market, coupled with its increased focus on high-margin products and operational improvements, appears to set the stage for potential multi-year growth. The company's ability to secure contracts with major global players underscores its growing prominence in the industrial flow solutions sector.