Shree Refrigerations - SME

sujain11 · September 14, 2025, 7:52am

Company: Shree Refrigerations Limited**

Sector: Industrial / Electrical Equipment (HVAC & Refrigeration)
Exchange: BSE SME

Basic Details:
Market Cap:** ₹739 crore (approx.)
Issue Price:** ₹125 (IPO upper band)
Current Price:** ₹208 (as of 12 Sep 2025)
Listing Date:** 01 Aug 2025

Financial Highlights

Revenue (FY25): ₹98.7 crore (FY2024-25)
Net Profit (PAT): ₹13.5 crore (FY2024-25)
ROE: ~15.4%
Debt-to-Equity: ~0.37
Revenue Growth (3-year CAGR): ~30% (approx. CAGR from ~₹45cr in Mar-2022 to ~₹99cr in Mar-2025)

Business Overview

What they do: Designs, manufactures and installs chillers, refrigeration, HVAC & turnkey cooling solutions. Core customers include industrial, defence, marine, chemical and pharmaceutical sectors.
Key Products / Services: Industrial chillers, precision climate control / packaged HVAC systems, custom / mission-critical refrigeration solutions.
Market Position: Established player in defence & industrial cooling; successful SME IPO; now moving into commercial cooling segments.
Recent Development: Signed MoU / strategic partnership with Smardt Chillers Pte Ltd (Canada) via its subsidiary Trezor Technologies to bring magnetic-bearing, oil-free chiller technology for data centre cooling in India. Aims for high energy efficiency, lower operational costs, better reliability and uptime. Expected to contribute ~10-15% of overall revenue over the next 3 years from this vertical.

Management Quality

Promoter Background:** Experienced promoters with industry knowledge in refrigeration and HVAC.
Promoter Holding:** ~44.6% post-IPO (down from ~56.6% pre-IPO).
Key Management:** Promoters and professional management team as listed in IPO filings.

Investment Thesis

Positives

Strong track record in industrial & defence cooling; access to mission-critical contracts adds credibility.
High growth potential from data centre cooling segment, supported by MoU with Smardt (global tech in oil-free, magnetic bearing chillers).
Good revenue & profit growth in recent years, with moderate debt burden.
Diversification of product and customer mix; expansion into commercial data centre vertical could provide higher margin & scale.

Concerns / Risks

Valuation is already steep: high P/E, P/B and EV/EBITDA relative to peers; growth expectations baked in.
SME listed companies often have lower liquidity => price may be volatile.
Execution risks: delivery of advanced cooling systems, maintaining reliability & servicing; also supply chain & working capital risks.
Dependence on data centre market growth and regulatory / environmental compliance for high-efficiency (e.g., energy use, emissions) which could bring cost pressures.

Valuation

P/E Ratio:** ~42.6×
P/B Ratio:** ~6.2×
EV/EBITDA:** ~29×
Compared to peers:** Valuation is rich versus larger listed HVAC/engineering companies.

Growth Catalysts

Execution of the Smardt partnership: delivering magnetic bearing chillers into data centres.
Rising demand for energy-efficient cooling (e.g. stricter norms, sustainability goals) across India.
Expansion of service / maintenance business for cooling systems, especially mission-critical infrastructure.
Government support / policy push for data centres, digital infrastructure, energy efficiency.

Red Flags to Monitor

Delay or cost overruns in implementation of new technology projects with Smardt or others.
Slow ramp up in contribution from data centre vertical; if revenue ≠ expectations, valuation correction risk.
Customer concentration risk in defence / marine or large industrial orders.
Regulatory / environmental compliance risk (especially concerning energy usage, refrigerants, emissions).
Macroeconomic / input cost inflation (steel, electronics, refrigerants) could squeeze margins.

Summary & Outlook

Shree Refrigerations has strong credentials in defence & industrial cooling. The strategic move into the data centre cooling segment via the Smardt MoU is a promising growth lever, offering potential for new high-margin revenue streams and improving its product mix. If the company executes well, maintains technological quality, and leverages its partner’s expertise, it could justify its premium valuation. However, the risk remains in execution and whether the data centre vertical can deliver the scale and margin growth expected.

Company Overview

Founded in 1990, initially focused on domestic and heavy-duty chillers.
Expanded to industrial chillers and spreader dumping systems for the newspaper industry.
Developed critical import-substitute products used for testing and cooling compressor capacities.
Entered marine refrigeration and air-conditioning in 2012; after 4–5 challenging years, received its first major warship AC order (INS Shruv) in 2017 — without foreign collaboration.
Completed full refrigeration panel installation for INS Vagsheer.
2018: Won contract for P17A Alpha warship, beating multinational competitors.
Later added contracts for Shallow Water Corvette Project and Fleet Support Ships.

Core Business & Capabilities

Specializes in high-performance refrigeration and air-conditioning solutions for naval defence (warships and submarines).
Only Indian HVAC company approved by all three naval authorities, enabling complete end‑to‑end systems for defence.
Activities cover design, manufacturing, supply, installation, service, and spares management.
Test equipment installed across major manufacturers: LG, Godrej, Emerson, Tata Motors.
Operates a state‑of‑the‑art HVAC test infrastructure.

Marine & Non‑Defence Expansion

Expanding into the non‑defence marine segment, supported by government targets to build ~200 merchant ships in the next 3–5 years.
Shipbuilding revenue is seasonal — in FY25, ~20–30% revenue was recorded in H1 and ~70–80% in H2.
Expected to ease toward a more balanced pattern in FY26 due to a stronger order pipeline.
Defence revenues provide long‑term visibility due to extended delivery, installation, and post‑commissioning support cycles.
Has potential to grow 40–50% CAGR up to ₹500 crore revenue level without new equity, funded via internal accruals.
Current bid pipeline: ~₹800 crore + ₹200 crore from marine ecosystem.
Challenges for new entrants:
- Stringent testing and qualification requirements.
- Lengthy, bureaucratic approval processes (3–4 years before monetization).
Retrofit projects: Attractive, higher‑margin niche allowing market entry where Shree previously had no presence.
HVAC share in ship cost: 0.5–0.9% of ship order value.
Holds >50% market share in its domain — intends to maintain this leadership.

Data Center Segment

Entered data center cooling via partnership with Smardt (approved vendor for NTT, AWS, and others).
Collaboration provides localized support and advanced cooling solutions for hyperscale data centers.
Aims for double‑digit revenue contribution by FY28.

Financial Performance & Outlook

FY26 Revenue: ₹140–150 crore expected.
Net Profit Margin: 13–14%.
Long‑term EBITDA Margin: 20–22%.
Added 75 new employees (~30% increase) — front‑loaded cost temporarily impacted profitability in H1 FY26.
Order book (as of 30 Sept): ₹327 crore
- ₹215 crore in April + ₹162 crore new orders added.
- ₹50 crore already executed.
Maintaining 40–50% CAGR growth guidance.
FY23–FY25 performance:
- Revenue: +40% CAGR
- EBITDA: +50% CAGR
- PAT: ~5× increase

My take
The data center segment is relatively new for the company, and it appears they are still in the early stages of exploring this market and understanding its dynamics. While management is optimistic about the long-term potential, the company must first establish technical credibility before achieving significant traction, which may take some time. So far, they have shared limited details about the initiative, and their current role seems confined mainly to providing after-sales cooling support rather than offering full-scale data center solutions.

Management’s repeated mentions of this segment suggest they want investors to view it as a key growth driver, but the company has yet to demonstrate meaningful capabilities in this area. Furthermore, the data center market involves intense international competition, as global hyperscalers tend to select vendors based on proven performance rather than local presence. Hence, this segment should be monitored closely to assess how effectively the company translates its ambition into tangible progress.

The company has performed well recently in establishing its presence and capturing a significant share of the domestic defence market. It appears to be reaping the rewards of its earlier groundwork and perseverance. There is also a major buildup underway in the Indian shipping ecosystem — you may refer to the provided links for a broader understanding of the sector.

Currently, most global shipbuilding takes place outside India, with the country holding less than 1% share in the commercial shipping market. However, India aims to achieve at least a 5% share by 2030. This ambition, supported by strong government focus, provides a clear tailwind for the sector, although competition remains intense.

The defense segment looks particularly promising, given the substantial upcoming orders for corvettes and submarines — estimated at over ₹1 lakh crore — expected to be awarded by Mazagon Dock and Garden Reach in the next few quarters. Shree appears well-positioned to benefit from these opportunities. The management has expressed confidence in achieving 40–50% CAGR growth over the next four to five years. While this outlook seems optimistic, it appears achievable considering the sectoral tailwinds.

That said, execution will be crucial, and much of the optimism is already reflected in the share price. Even assuming a PAT of around ₹20 crore in FY26, the company is trading at over 30× earnings — relatively high for an SME stock that has yet to be tested under broader investor expectations.

note- not invested just tracking

Nabendu · March 10, 2026, 2:35pm

Shree Refrigerations is my second biggest investment and have been invested since listing day with a weightage of roughly 18% to 20% of my PF .

This is not a typical SME business which is run by a single promoter who tries to be a single man show but has invested heavily in hiring a very huge team of professional management which sets it leagues apart from any other SME I have observed till date. We cannot judge every book with the same cover and I would be pleasantly surprised if someone shows me another SME company with such a high quality management and board .

Commodore Sunil Kaushik NM https://www.linkedin.com/in/commodore-sunil-kaushik-nm-vsm-retd-pmp-csm-lssbb-c-eng-fimare-16131724/ was of Commodore Rank in Indian Navy and is not an Independent Director of Shree Ref but a Whole Time Director at Shree Refrigerations. A man of his stature and talent cannot be brought by merely money.

How does this all matter ? These are the ranks in Indian Navy

To the best of my knowledge there has been No Admiral of the Fleet in Indian Navy till date ,

And where was Commodore Sunil Kaushik seated in the Scheme of the Commodores in the WPS Conclave 2022 . Warship Production Superintendent (WPS) Conclave .

There are only 07 Warships/ Submarine Production Superintendents in the country and Mr. Sunil Kaushik was one of the senior ranking Warships/ Submarine Production Superintendents based on where he has been seated in the conclave.

What is the role Warships/ Submarine Production Superintendents ?

Warship Production Superintendent (WPS), the official representative of Naval HQ and head of the Warship Overseeing Teams exercises financial control, monitors progress of production schedules and ensures assurance of quality in respect of ships under construction at the shipyards. WPS and the team under him acts on behalf of, and corresponds directly with NHQ in regard to all new construction ships . They also ensure that the suppliers are onboarded .

Where was Commodore Sunil Kaushik poistioned ?

He was incharge of P15B & I guess P17A projects being positioned at Mazagaon Dock , Mumbai. Somewhere around 2022 he was transfered I believe to Vizag …

Lets look at where other Warship Production officers of his batch have moved into

Indrajit Dasgupta another senior Warship Production officer of his batch joined GRSE after retirement

https://www.linkedin.com/in/indrajit-dasgupta-5b5178259

Brings a big question ? He was one of the 7 officers in the country entrusted with managing the entire production of Warships / Submarines under him . He could have been grabbed by one of these PSUs like Indrajit Dasgupta or some big conglomerate groups and lived a happy life or choose to be Independent director for multiple companies.

What did he choose ? He choose to join Shree Refrigerations an SME which was not even listed back then .. What magic potion did promoter Ravalnath Shenge give to Cmdr. Sunil Kaushik that he joined an unlisted company which is based out of Karad an obscure location far off from the fancy offices his batchmates were joining

Now brings me a big question was the Commodore Sunil Kaushik agree joining to such a small obscure SME. What was this magic potion ?

Based on Ravalnath Shende past interviews available on Youtube way before IPO during 2020 to 2023 period he has publicly quoted Commodore Sunil Kaushik on a couple of times . Commodore Sunil Kaushik was the one who enrolled Shree Ref to participate in the P17A project when their old partner backed out at the last minute and they were without a partner to supply the compressor. He still got Shree enrolled as he knew the promoter and his capabilities to bid on the project and within the next couple of months Shree Ref partnered with Smart I presume to get the magentic oil free compressor tech transferred to Shree Ref.

In another instance , it was said by Ravalnath Shende that Commodore Sunil Kaushik was highly appreciate of the work Shree Refrigerations had done , and he mentioned that Sunil Kaushik was instrumental in having Shree Ref promoter met the Vice or Rear Admiral after he was transferred to Vizag that “Shree Ref is one vendor who has always ensured to stick to the delivery timelines”

So joining Shree Ref was not just for ESOPs or some small gains . It was a mutual respect for each other whose seeds date back to 2019 or earlier and while the promoter may be enthusiastic post IPO but if there is any words spoken by Commodore Sunil Kaushik as a Director of Shree Ref I would trust and weight these words more than even the promoter of the company .

But while I was laser focussed on Sunil Kaushik , one man does not make a start studded lineup . Lets look at who else are on the board / senior management of Shree Ref

Colonel Lalit Rai https://www.linkedin.com/in/lalit-rai-2a053713/ Vir Chakra awardee for Kargil War.

Commodore Vivek Karnavat https://www.linkedin.com/in/vivek-karnavat-5bb1a919/?originalSubdomain=in . Commanded a naval aviation base with over 1000 personnel, aligning aircraft and manpower with Western Fleet ships’ needs. Additionally, supervised maritime air operations in Western Naval Command.

Commander (Cdr.) Manoj Parashar https://www.linkedin.com/in/manoj-parashar-2410a0322/?originalSubdomain=in . I believe he is the same Lt. Cdr. Manoj Parashar who was stationed on INS Vikramaditya based on a 2013 article by Shiv Aroor

Sumeet Mathur https://www.linkedin.com/in/sumeet-mathur/?originalSubdomain=in Joint Director as per linkedin in Indian Navy for 20+ years . IIT Bombay graduate .

Nandakumar Athavale https://www.linkedin.com/in/nandkumar-athawale-263118b1/?originalSubdomain=in . VP L&T Defense Engineering . Was with L&T Defense for over 20 years

Nilamkumar Gharat https://www.linkedin.com/in/nilamkumar-gharat-aba4252a6/?originalSubdomain=in General Manager at Mazagaon Dockyards

I am a strong believer that people make organizations and it is rare to see a senior management quality what Shree Refrigerations . And Shree Ref has been at it since long.

Lets also pay tribute to Cdr. Sameer Oak who joined Shree Ref in 2023 but lost out due to his untimely demise . Cdr Sameer Oak was vocal on Defense Indigenization in 2019 and was part of MCCIA which is also where Ravanlath Shende has been active

Cdr. Sameer Oak https://www.youtube.com/watch?v=n_zLJnqYP8o

Now coming to their DC business . Smardt is the company which created the magnetic oil free compressor technology . SMARDT | Industrial chiller manufacturers for +25 years

”Smardt’s founder Roger Richmond-Smith and his technical partner Ron Conry started Turbocor oil-free compressor development in 1993 in Melbourne, Australia. In 2000, their team moved to Montreal, Canada, to complete this breakthrough technology’s development and its 2003 commercial launch. Turbocor partnered with Danfoss in 2004 when Roger retired to academia in Paris. In 2005, he partnered with the U.K.’s Direct Energy to start Smardt as the world’s first chiller company dedicated solely to high-efficiency lowest-lifetime-cost oil-free centrifugals.”

Today, Smardt’s pioneering commitment since 2005 has already dramatically cut global chiller energy consumption and owner operating costs with over 10,000 Smardt chillers now operating.

Danfoss acquired the technology in 2000’s and then changed it to Turbocor . The value of Smardt can be understood that the Chinese HVAC major TICA Group aquired Smardt in 2 tranches in 2018 and 2022 .

As per Gemini some stats about the TICA Group

Air Handling Units (AHUs): TICA has been the largest producer of AHUs in China for five consecutive years, commanding a 40% market share in high-demand sectors like micro-electronics, surgery rooms, and biopharmaceuticals.

Modular Chillers: It ranks third in China and fourth in the industry globally for modular chiller products, with a market share of roughly 8.6%.

Purifying VRF: It ranks among the top five in China for Variable Refrigerant Flow (VRF) units, particularly those focused on air purification and health

Smardt Chillers are already been deployed by NTT Data at its Development Head Office in Tokyo so they are not someone who needs to prove themselves .

To my limited knowledge , these chillers also use the oil free magnetic bearing technology pioneered by Smardt and these are not the cheapest chillers in the market but the most cost efficient . Shree Refrigerations has the template set. They disrupted the longstanding MNC’s in Indian Navy and aspire to have atleast 50% of the new orders won ( this is as per Commodore Sunil Kaushik ) . Whether they can in a similar fashion disrupt the DC is to be seen but with the high quality management for an SME of its size , there is very less reason to believe they will not be able to capture atleast a small part of the business

To me following are the triggers for Shree

High Probability

Indian Naval Shipbuilding - > Sticky business … Right to win is high … Kirloskars may be the biggest challengers

Commercial Shipbuilding - > If likes of Swan and other MNCs can revive the Commercial Shipbuilding there is another big pie weighting to be captured

Medium Probability

Datacenter Business → The product / tech / capability is all there. The price advantage and how they scale this vertical up is something to be seen .

Low Probability
This new BESS Cooling vertical can be the dark horse

What do I feel on the Indian Navy Dark Horses

Commodore Sunil Kaushik is strategic for guiding Shree new product rollouts for the Indian Navy .

Having being responsible for the entire warship production of P17A & P15B projects till 2024 he surely knows what Indian Navy requires from Indigenization and he also knows Shree Ref capabilities . This could be decisive in guiding Shree Ref future .

If Shipbuilding ( Naval / Commericial ) has to succeed in India , I do not find a better bet to play the space from a long term perspective apart from Shree Refrigerations .

Inviting other way more knowledgeable members on this forum to share their views on Shree and also let me know if they know of any SME or micro cap company which has an equally capable and competent management structure which one could be envious off

I leave everyone with a food for thought. There is another listed SME Airfloa Rail Technology which was being hyped around for its quality management and I was also interested seeing their management and some of their KMPs especially on the railways side of the business.

But looking at the their Big Bang Boom solutions partnership has completely put me off . I believe Railways has a long way to transparency and greasing pockets is common practise but when promoters take this mindset to India’s defense will not do good on the long run .

Krupa_Patel · March 24, 2026, 5:00am

how do you look at the valuations?

vish1 · March 24, 2026, 6:58am

That’s my concern as well on first look on most of the conventional metric.

vivek_lakhani · March 24, 2026, 8:31am

@Krupa_Patel & @vish1
For sme stocks & below 2,000 Cr market cap, and that too for companies with limited historical data available, its futile to study on conventional metrics.
You can’t even rely on technicals as there wont be large volumes to derive any meaningful trends.

For such micro-micro cap (684 Cr & only 3,381 total shareholders), you just need to take leap of faith, believing in business & management, and giving investment time of say 3-5 years before concluding anything.

Or if you want solely to rely on conventional metrics, for that again give time of 3-5 years so that a financial trend of the company develops before investing your hard money in.

Dis: Invested with 1% of portfolio allocation.

Nabendu · March 24, 2026, 9:01am

This sector has a lot of tailwinds in its favour … shipbuilding as a whole is destined to grow and alot of policy and big conglomerates money has started moving in the areas . Management has guided 40 to 50 % YOY growth which you need to trust on . The risk is the governmental capex in shipbuilding will slow down but with the fragility of the world there is a lesser probability of capex investments reducing in this space irrespective of the government.

Again management has to prove their guidance in H2 and if it does prove the growth guidance and with the forward growth projections I do expect a good upside to make it in my top 2 position .

Shail1234 · March 28, 2026, 2:36am

Nabendu, how do you see CFF fluid control in Shipbuilding and defence ? Quite niche it is with all tech transfers and big OEMs as partner.

About Airfloa yes on big bang some allegations are there but Airfloa is not acquiring them, airfloa is a manufacturing partner, if any tech is approved of Big bang by any authority or production order is given then airfloa will execute it. So many indian companies are working with foreign companies to acquire tech and then replicate here in. Also these allegations are old and now any order by Indian army would be given by proper due diligence so chances of faking by big bang are very very low.

Your views please. Thank you

Nabendu · March 28, 2026, 4:13am

I have not done a deep dive on the management/kmps/mid level management of CFF Fluid control so I would like you or someone to enlighten me on the management capabilities.

SMEs single biggest risk is poor quality / unethical management which are exploited / incentivized by the market participants especially in SMEs .

Retail investors are generally caught on the wrong side more often than not.

I run a concentrated PF of 10 to 12 bets at max with my top 2 positions being 35% yo 40% of my invested capital so getting a wrong bet is not an option for me .

So I need to go much deeper than the narratives / twitter / vp hype and build my own conviction through unconventional sources which are often neglected by market participants who primarily focus on numbers and projections.

What differentiates Shree and BBBS while Shree and many others like CFF / Krishna would let the world know this is via a tech transfer , we have companies like BBBS who claim they developed the anti drone system indigenously ( which was found to be an Chinese import) .

This shows how transparent /ethical the BBBS management and when things come to national security backing such promoters is in a way incentivizing more of such fraudulent promoters to come up in the capital markets .

And thinking Airfloa management does not know these allegations / practices when doing a tie up with BBBS is like living in a parallel ideal world .It also gives me a very wrong impression on the Airfloa management and the management integrity which is in question. I prefer to be safe than sorry.

Shail1234 · March 28, 2026, 6:47am

100% agree that management is the key in SME.

Cff promoters are in this naval defence for long but really no interactions available of promoters, no interview, no concall, no media posts. Recent FPO prospectus and OEM partnership of Israel, France, Germany gave some idea. They are entering into equipment manufacturing and subsystem manufacturing of Navy defence ships as per FPO.

About Airfloa and BBB, may be BBB is wrong if they had acquired chinese tech n claimed theirs but then that does not make anyone associated with them as wrong. Airfloa did a jv with BBB, ministry of defence gave BBB an order so we cannt say we cannt trust MOD as well as they joined hands with BBB an unethical startup. Thats my view.

Shree Refregeration does HVAC and Cff is also in it as per FPO. just a point to mention.

Your top 2 sme as of top 35-40% allocation are Shree refrigeration and ASM ?