Aeroflex Industries Ltd - The future of flexible engineering?

[Prdnt_investor]

@phreakv6

Aeroflex - I feel this is the dark horse among the pack because there is a lot that can go right here if they can leverage capabilities quickly enough - and so far, they have shown that they can, since the liquid cooling skids wasn’t even part of business same time last year and is now a 5% contributor for FY26 and will be 20% in FY27 and most likely 40-50% in FY28. Sticking to the theme of only talking about what’s new, one of the most important things is this

The management has guided for a 3.25 lakh as avg realisation per skid. This is a considerable jump from 15000 skids with peak revenue of 350 Cr, yielding 2.33 lakhs per skid. This I feel is still very conservative because Aeroflex can contribute a lot more value per skid. I suspect they are even capturing 10% of what’s possible. Not just in the skids, but in the overall liquid cooling - especially if they can break into the rack level components which will be much higher in value.

There are initial signs of that. I am not sure if I put out my thesis on Hyd-Air here in the previous posts. If you haven’t yet, do have a look at their products. There are a lot of high value stuff in these, like the QDC and other fittings and as per specs they are interchangeable with some of the best in the business.

This was one of the things that got me exciting initially on Aeroflex in my initial research because this company is also setup at Chakan close to Vertiv’s own manufacturing plant. In recent call, there were some things on Hyd-Air I found interesting validating this thesis

My guess is Hyd-Air will continue to grow at a great rate and contribute to Aeroflex internal consumption for value add in skids and also in the last-mile rack level components. In terms of exit run rate, looks like post 15000 skid expansion, Mar 2026, they can exit at 60% util (750 skids) which means a 300 Cr contribution from LC in FY28 (750x12x3.25 lakhs) even if we assume no growth in that run-rate. From 0 last year to 600 odd skids per quarter now to 750 per month is breakneck scaleup for what is essentially a completely new line of business. I think 15000 skids is perhaps ~200-250 MW of capacity based on some assumptions. If India has to add 5-10 GW of DC capacity and Vertiv has 70-75% of this market share (as per Aeroflex Arihant call), and Vertiv has exclusivity with Aeroflex, you can imagine how much this capacity has to go up by in the next 4-5 years. It has to pretty much double every year, just like Mtar if things play out. Its still very early days though. On top of this, they can increase the % of value add by adding new products as well which is why I feel this can be the dark horse as there are several things that can keep surprising on the upside.

Referencing in the company thread for continuity