Ladies and gentlemen, good day and welcome to Aeroflex Industries Limited Q4 and FY 2026 results conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinion, and expectation of the company as on date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Asad Daud. Thank you, and over to you, sir.
Thank you so much. Good morning to everyone. I welcome you all to Aeroflex Industries Limited fourth quarter and FY 2026 earnings call. Joining us today are members of our senior management team, along with the representatives from Strategic Growth Advisors, SGA, who are our investor relations partner. I hope you have had the opportunity to review our financial results and the investor presentation, which is available on the stock exchange website and also on the company's website. I am happy to report that FY 2026 has been a great year for the company, where our execution excellence, our strategic expansion, and the market opportunity have all come together to deliver the highest ever quarterly and yearly performance to date.
I am also happy to share that the board has also recommended a final dividend of 20%, which translates to about INR 0.40 per equity share of face value INR 2 each. This reflects our continued commitment to delivering value to our shareholders. The company operates in a very niche global market with limited competition, and we also benefit from a competitive advantage as the only India-based manufacturer with such scale and with such capabilities. FY 2026 has been a landmark year, which has been marked by our successful entry into the skid assemblies and advanced flow control solutions for high-performance liquid cooling applications, which are used specifically in data centers and AI infrastructure segments.
As the consumption of data increases and continues to scale rapidly across the world, primarily led by AI, cloud, and high-performance computing, there is a limitation of traditional air cooling, which is becoming increasingly evident, and thus liquid cooling is emerging as the preferred solution for the next-gen data center infrastructure, given its superior performance efficiency. Now, talking about the key highlights for the quarter. Our hoses and assemblies business continues to demonstrate steady and consistent growth, which is also supported by robust demand coming in from diverse end user industries and also our established global customer presence. We have achieved an EBITDA margin of 23.86% in Q4, which also reflects our strong operating leverage and also is a result of the continued improvement in our product mix.
Talking about our subsidiary, Hyd-Air Engineering, which has continued to gain strong traction during this quarter, delivering robust year-on-year growth, primarily driven by healthy demand across its entire product portfolio. We also continue to enhance the product portfolio and expand the market of Hyd-Air Engineering, and also Hyd-Air Engineering in the future would play an important role in the new age businesses that Aeroflex plans to enter into in the coming years. Our newest segment of providing liquid cooling solutions continues to expand with the ongoing supplies of the skid assemblies, which has commenced from the end of Q3, and also the supply of advanced flow control components for high-performance applications. In the last financial year, we achieved a strong traction in our skid assemblies business with the sales of 617 skid assemblies, which resulted in an overall sales of approximately INR 21.2 crores.
This has been done over the last four months itself. This performance shows the increasing market acceptance of our products, and it also reinforces our capability to deliver customized high-value and solution-oriented offerings, positioning this segment as one of the key drivers of the company going forward. We also showcased our entire portfolio of advanced flexible flow solutions at the Data Center World Exhibition, which happened in Washington. last month. It reinforced our strategic focus towards the next-generation thermal management technologies for the global markets. Currently, we have scaled our skid assemblies capacity from 2,000 units per annum to 6,000 units per annum. We are on track to further expand the same by the next quarter to 15,000 skids per annum. We are also strengthening our innovation pipeline with more than 16 products under development, which are primarily focused on high-growth segments.
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. These initiatives are expected to increase our product offerings, also increase our throughput, and also support the deeper penetration that we want to do especially in mission-critical applications. Our metal bellows segment has begun to gain traction across a range of applications, and we are expecting this division to deliver strong growth in the coming years. Now talking about our financial performance for Q4 FY 2026.
Our total income stood at INR 126.5 crores, which is a growth of 38% on a year-on-year basis, which is driven by an improved product mix and a growing contribution from value-added solutions. The EBITDA for the quarter came in at INR 30 crores, which is a robust growth of 59% on a year-on-year basis. Our EBITDA margin also saw an improvement of 326 basis points, and it came at about 23.86%. The profit after tax stood at INR 17.6 crores, which is a growth of 57% on a year-on-year basis with a PAT margin of almost 14%. Our cash profit grew significantly to INR 25.4 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. Now talking about our FY 2026 as a year, the total numbers.
I am happy to share that we have been able to achieve the targets that we had set out at the start of the financial year. Our total income stood at INR 443.3 crores, which is a growth of 17% on a year-on-year basis. This is despite the fact that we had a very weak first quarter. EBITDA stood at almost INR 100 crores, INR 99.7 to be precise, translating to an EBITDA margin of 22.6% and a growth of 26% in value terms on a year-on-year basis. Our PAT stood at INR 55.5 crores with a PAT margin of 12.5%. Our skid assemblies segment, which is our newest segment, has begun contributing to the top line and is right now accounting for only 5% in FY 2026, but we expect this share to scale significantly in the upcoming years.
Our value-added product segment, which includes assemblies and fittings and bellows, contributed 52% of the total sales. Domestic sales contribution has also increased to 31% from 26%, which is mainly driven by the increased traction coming in from the steel assemblies and also from Hyd-Air Engineering. Looking ahead to the current financial year, which is FY27, we remain focused on deepening our strategic shift towards higher value-added products and also expand our presence in emerging sectors such as data centers and AI infrastructure. We will continue to pursue growth through new product development, through optimization of margins, capacity expansion, geographic diversification, and also inorganic opportunities. These initiatives position our company to strengthen our market leadership and deliver consistent growth both in terms of top line and bottom line.
With the strong order pipeline that we currently have, long-standing customer relationships, and our ongoing investments in technology and capacity, we are well-positioned to sustain our growth momentum in the near future. We continue to strengthen our capabilities and to enhance our execution at the ground level and aim to deliver robust growth over the next few years. With that, I would like to conclude my remarks, and thank you so much everyone for attending the call. We can now open the floor for Q&A. Thank you.
Thank you so much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Nikunj Bhanushali from Walfort PMS. Please go ahead.
Yeah, thank you for the opportunity. Am I audible?
Yeah.
Yeah. I had a few questions. What is the order book for the liquid cooling skids that we have currently?
In the liquid cooling skids, we work on some contracts with the suppliers with whom we have an exclusive contract. They have given a pipeline for the entire year, and then they break it down into quarterly POs. Since right now we are dealing with one specific or only one particular supplier, due to disclosure agreements, we are not able to share the order book with them that we have. But yes, we have a vision for the entire year that they have shared with us. Our capacity expansion is based on the same lines.
Okay. Just if you can share something on the planned utilization levels that we will have for the 15,000 capacity for full year. In a half year we will have 6,000 capacity, I think about 6,000, and then we will go on to 15,000.
Yes.
What planned utilization levels?
I would say the maximum utilization that we can do of the capacity would be about 75%-80% at the peak level. Obviously, when we commission the capacity, to get it up to 75% would take its time, as naturally with any expansion. But the peak utilization, you can consider it at between 75%-80%.
Just a follow-up. 6,000 we can utilize up to 75% in the current year?
Yes.
My second question is regarding the metal bellows. Could you share numbers? How much was the business we did in the previous year for metal bellows in FY 2026?
In the current year, on an annual basis, we did about 8 crores of business from the metal bellows section. The majority of the business came in in Q3 and Q4, where we have seen the uptick in sales beginning in the last two quarters. We expect that this year, the bellows division would grow significantly because we have certain large inquiries coming in from OEMs. We are hopeful to get those converted and see a significant uptick in the sales of metal bellows in the current financial year.
Okay. Lastly, what was the Hyd-Air revenue for the FY 2026?
Hyd-Air's revenue in FY 2026 was 31.64 crores.
Okay. That's it from my end.
Okay.
Thanks for all the updates.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participants, we request you to kindly limit your question to two questions per participant. If you have a follow-up question, please rejoin the queue. Our next question comes from the line of Raman Kerti from Sequent Investments. Please go ahead.
Hello. Can you hear me?
Yes.
My question is just a follow-up on the previous participants with respect to Hyd-Air. What is our current utilization, and are we planning to do any CapEx in the Hyd-Air business?
In terms of utilization, I think Hyd-Air is currently at about 60% utilization. Our aim in this financial year is to utilize the capacity of Hyd-Air for internal consumption for Aeroflex Industries, because we have certain projects coming up in the next few months where we have requirements of specific fittings which we are going to manufacture in-house at Hyd-Air. These are products for high-end applications. Hence we want to utilize the capabilities of Hyd-Air for our internal consumption.
Okay, sure. On the liquid cooling part, you mentioned that the liquid, you have a technology exclusive agreement with one of the U.S.-based companies with respect to your technology, right?
No, with regards to technology, with regards to supply, with regards to everything. We have an exclusive contract.
Yeah
With them for skid assemblies, yeah.
I just want to understand, under this agreement
Yeah
are you sharing any revenue or are you giving them any royalty? If so, can we know any details?
I would just like to clarify. This is an exclusive agreement where we are going to supply the skid assemblies to them.
We have an exclusive agreement for the India market where whatever skid assemblies that we manufacture, we will be supplying it to them, and then obviously they will be supplying to their customers. Their customers are all the companies who are setting up data centers basically.
You are not paying anything to the U.S. client, right?
This is a U.S.-headquartered company. They have very big operations in India. We have tied up-
with the India subsidiary of theirs, basically.
Okay. Understood, sir. My last question is, during the quarter, we have seen that the exports have decreased from almost 69%, it went down up to 60% and your domestic business is picking up. Can we expect this to be the new normal, like 40%-60 %split between-
No
Domestic and exports?
I would just like to clarify, export has not decreased. The ratio has changed. That does not mean the value of exports-
Yeah
has decreased. Just wanted to clarify that. Domestic share has increased significantly, reason being that the domestic sales has almost increased by about 40%. That's why the ratio-
of domestic is higher as compared to the previous. But exports has also increased in double digits in Q4, despite the fact of the entire situation that you are seeing, which is happening in West Asia. Our exports have also increased, but because the domestic has increased significantly more than the exports, hence the ratio of domestic is now more. And obviously, because the entire business of skid assemblies will be in the domestic market, this ratio of domestic would also increase in the near future.
Can we expect the same, like you mentioned, that domestic business increased by almost 40%? Can we expect that domestic business to grow at a higher rate versus the export business or will it normalize?
Yes, definitely. Because the entire skid assemblies will be sold in the domestic market right now.
Okay
The share of domestic would increase for sure.
Okay. Thank you, sir. I will follow up in the Q.
Thank you. The next question comes from the line of Karan Gupta from ACMIIL. Please go ahead.
Yeah. Hi. Am I audible?
Yes.
Yeah. I can hear you.
Yeah. My question is related to more understand the product portfolio. I have some basic questions to understand. What is the share of our product share in the overall TAM of the data center in the liquid cooling systems? How much our products contribute in the costing side? Do we have any patents on that product or in terms of technology?
Sure.
And any competitive advantage over export market? What is the cost benefit we have? These sort of questions I have.
Okay. First of all, I will go with the last question first. Right now for the export market, for the liquid cooling, we are not supplying our skid assemblies in the export market right now. We are only supplying our hose assemblies, which goes into data centers in the international market. So skid assemblies right now is 100% in the domestic market only. In terms of the patents. We are working with, like I mentioned, this company. We are actually jointly developing the product along with them. But obviously, since they are the principal, we are designing the product along with them. So we are aware of the technology that goes into the product. But right now, we do not have any patent on the particular product. Also, reason is because the design of every data center is unique and it is different.
Hence, the skid assembly required for every data center in terms of the design would be different. Hence, there is no patent per se right now. It is about the technology. How do you manufacture the product in such a way that you reduce the operational cost for the data center. That is the real skill in this particular business. Because ultimately there is a huge operational cost for a data center in terms of cooling. How do you reduce-
their operational cost? That is the real USP in this. The total TAM, I think in the data center market right now is huge and growing at almost 35% on a year-on-year basis. Right now it is about, I think at about $3 billion right now, and which is expected to grow to almost about $21 billion in the next five to six years. That is almost-
a CAGR of close to 34%, 35%. That's the market that we are capturing right now. Although right now we have very small percentage of the market. But our aim is to keep increasing our market share and also to expand into more and more products which will be used in the data centers in the near future. Our aim is to-
Okay.
Yeah.
Just to follow up on that because the question will be unanswered. Let's say, just to add here the unit economics of the cost of one gigawatt of capacity. I have a figure, let's say one gigawatt of capacity costing you around INR 50,000- INR 60,000 crore in India. Not the hyperscale AI data center, but the normal one. This figure is correct, first of all, INR 50,000- INR 60,000 crore for one gigawatt of capacity?
I will not be able to comment on that because I am not in the business of making data centers. I'm probably not able to comment on something which I-
Okay.
I don't have the exact-
Just a broad TAM I am just trying to understand here. So let us say, if you just Google it, so it will give you INR 50,000 crore, INR 60,000 crore of it. In the liquid cooling system
This can be interpreted different for everybody. Can you be a little specific on your question? Is it some time for
Sure.
Thank you.
Yeah. So I just wanted to know the cost of 1 gigawatt of capacity, what is the share of our products basically? How much we are
I would say in terms of the entire First of all, just to clarify, we are not selling directly to the data centers. We are selling to the company who provides the entire liquid cooling solution. The skid assemblies is a part of the entire liquid cooling. It's not the complete solution.
The companies who are providing cooling distribution units.
Can I just touch on my answer, please? If you don't mind.
Sure.
My point was that we are only providing a part of the liquid cooling. Hence, to give you an exact number in terms of how much is our product as compared to the entire cost of the data center would be difficult to answer for us because we are not supplying directly to the data center. But from what I've understood from the market knowledge that we have gained is that the liquid cooling comes to about 10% of the cost of the data centers, anywhere between 10%-11%. That's the cost of the entire liquid cooling, which includes your primary, secondary, and all kinds of cooling at the data center. That's the TAM for liquid cooling.
Okay. That's very helpful. Thank you.
Okay.
Thank you. Our next question comes from the line of Tej Patel from Niveshaay. Please go ahead.
Thank you so much for the opportunity and congratulations on a good set of numbers, sir. Sir, first question is regarding if I go through the call pool of last quarter, probably you said INR 42 crores of skid was for immediate execution. Is it like there was some part of execution which was supposed to be done in this quarter but was not done? If not, then what was the reason? Is there some supply bottleneck?
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, unless the skid assemblies is designed and finalized, the production cannot start for the same. Plus also, what we have seen over the past couple of months is that there is a significant supplier quality control and, sorry, customer quality control and customer audits. The end customer, I am talking about. Not the one that we are working with. The end customer at whose data center, the particular skid assemblies will be installed. So there is a very stringent and very detailed quality checks that are conducted by each and every customer. And every customer have their own unique way of doing the audits.
So obviously, some look at some specific things, some look at the welding aspect, some look at the design aspect. That is one where we still feel that I think we are still slightly behind the supply as compared to the demand is because the design and the quality checks post the manufacturing, that is where something we are facing a bit of a bottleneck in terms of the time. But, yeah, I think we are hoping that over the next couple of months, I think that will be streamed out, and smoothened out. I am sorry. Then we will be able to see more business, in the sense more sales happening from this particular business. In terms of manufacturing, we are still much higher, but obviously supply depends on a lot of these quality controls and quality checks.
Understood. That helps, sir.
Yeah.
Sir, my second question is, you although said for 6,000 skids, we will be probably reaching 75% of the utilization, but let us say once you expand it to 15,000, the incremental capacity would probably reach up to what utilization by, let us say, the end of year?
Well, our target would be that by the end of the financial year, to reach to at least 60%-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.
Okay.
Obviously, it depends a lot on the operational side, because the business right now is. There is a lot of operational excellence required to manufacture these kind of skid assemblies.
Understood. But sir, that is great. If we are probably expecting to reach 60%-70% of utilization, are we probably planning to add more capacity towards skids? Are you planning to go beyond 15,000?
See, our ultimate aim is to go beyond 15,000. But I would say right now, our focus is to get the first 15,000 commissioned and get it up and running. Obviously, the first focus is over there. Then obviously, once that is under process and once it is commissioned, we will then look at further expansion.
Great. Sir, you mentioned the PPT as well. We probably represented in an expo in U.S. Any engagement from there, any leads from there? Are we engaging with some customers apart from the one which we probably won in domestic? Are we engaging with some other customers in the international market through that expo or somewhere else?
So our aim in that exhibition was to expand our business internationally also in terms of the liquid cooling space. That is why we exhibited in that exhibition. We have already got certain leads, and the team has started working on those leads and to discuss with those customers with regards to the liquid cooling solutions.
Great.
We have already started the discussion, but very difficult to comment on that right now, about the status.
Understood. And sir, for Hyd-Air Engineering, you said we are probably using it for a niche application and high-end application.
Yeah.
Would Hyd-Air Engineering be probably used for connectors in D.C. as well? If yes,
Yes.
Then what I understand is for us to probably use Hyd-Air connectors, you need approvals from the HVAC player, right? The customer we are right now working with.
Yeah
Are those sampling and approvals going to them? What stage are we in that?
Yeah. So, like I mentioned, we want to utilize the capacity of Hyd-Air for our internal use right now, because we are seeing a lot of demand coming in from end fittings and connectors, not only for our hose assemblies, and for some specific application in HVAC and also for data centers. Hence we are planning to utilize the capacity of Hyd-Air over there. Yes, in terms of supplier checks and, sorry, customer checks and customer audits, I think at whatever manufacturing facility we manufacture any product, obviously, first we require all kinds of certifications which are required by the customer. Then obviously customer audits and customer supply checks are a must before we start supplying to these high-end industries.
Okay. We are in the process of getting
I am sorry to interrupt you, Mr. Patel.
You may please rejoin the queue for more question.
No problem. Thank you so much, sir.
Thank you.
Thank you. Reminder to all the participants, in order to ensure that the management will be able to address all the questions from the participants, we request you to please limit your question to two questions per participant. If you have a follow-up question, please rejoin the queue. Our next question comes from the line of Soumil Jain from Lakshay Investments. Please go ahead.
Yeah, sir. Thanks for the opportunity.
Okay.
First question. At 15,000 skids full utilization, can you give us a sense on how many megawatts of liquid cooled data centers that can support?
Well, it's difficult to give a number for that. I can probably say that in terms of the business, I can say that at 75% the capacity utilization. Like, which, as I said, could be the peak. We can expect a total revenue for the business to come in at about INR 325 to about INR 330 odd crores. May I, sorry?
Sorry, go ahead.
Yeah. So INR 325 crores to about INR 330 crores. In terms of megawatts, it is slightly difficult. The reason being, if you see that some skid assemblies that we manufacture sell at a higher price, some skid assemblies that we manufacture sell at a slightly lower price. And the entire design depends on the design of the data center and how they have designed the entire data center. Is it a more flat data center? Is it a more vertical data center? Is it a different style of data center? So, commenting on specific how many megawatts that would convert into, would be difficult for me to give an answer. I can talk about the revenue, yeah, that how much it will generate us. Yeah.
Got it. On the base business, can you talk about the share of the largest customer? If you could talk about the growth outlook from that customer or from those set of customers, given the infrastructure build-up in the U.S. that we are seeing now.
Are you talking about the U.S. or are you talking about the liquid cooling skid assemblies?
No, the U.S. business. Ex of skid assemblies. Yeah.
Okay. I think our biggest customer in the international market contributes about 25%-26% of our sales right now. In terms of the outlook, despite the fact that the last year, U.S. had all kinds of issues in terms of, initially beginning the year with tariffs and then the tariffs got even bigger, coming up to the middle of the year, then ultimately at the starting at almost the middle of Q4, when the tariff relief came in, but then suddenly when the war happened. Despite all of that, I think our U.S. business contribution to our overall sales has increased in terms of the sales. In terms of the value, also, the U.S. business has increased as compared to the previous year. I think despite all of that, we are seeing significant uptake.
The start of the year, to be frank, we were expecting the U.S. business to do much better. I think I would say despite everything that happened this year in the U.S., despite all of that, the U.S. business has still shown a significant jump. I think I would say that's a great achievement by the team to get this kind of business from the U.S. and despite all of these issues that have happened in the year.
Got it. Good to hear. One final clarification. The connectors that we spoke of, these are the QDs that have proven to be bottlenecks in the tech industry, especially for liquid cooling elsewhere in the world. Is my understanding correct?
No, not necessary. The connectors that I am talking to you right now, some of it are used for skid assemblies, some of it are also used for hose assemblies, which are ultimately used in data centers. In terms of our bottleneck, the bottleneck is not the connectors per se, our bottleneck is right now the design part, as I said. The second is the customer check and the customer audits that happen on a regular basis and almost every day.
Okay. Your largest account growing at a certain pace, is that because of higher wallet share with that specific customer or the end industry for that largest customer growing at that pace?
You are talking about the-
In the U.S. business.
In the U.S. business. In the U.S. business, we have seen not only the largest customer grow, but also the other customers that we have also shown a lot of growth. We are also seeing a lot of demand coming in for hose assemblies from the U.S., from customers who we previously did not have. These customers are the ones who are looking for the products that we are manufacturing, whether it is the hose assemblies. And like I said, even we started to receive orders for metal bellows as well. So we are seeing attraction for these products in the U.S. as well.
Great to hear that, sir. Thank you so much.
Thank you. Our next question comes from the line of Shweta from iPoT PMS. Please go ahead.
Yes, sir. My first question is a follow-up on the previous question. So this around 60% utilization that we are targeting by next year, March, is that incremental orders coming fully from this principal company, or are we also looking at export orders for the skids?
Right now, what we have is for the orders which will come in from the principal only. Because we have not taken into consideration the orders which will come in for any other customers, because the other customers, the talks have just begun, so it's too early to say that.
Okay. And sir, I saw that in this quarter's PPT, we had increased the miniature bellows capacity to 60,000 pieces. So will this be sufficient for our 15,000 skids, or will we be needing more CapEx in this regard?
Sorry.
For the miniature bellows segment. The miniature bellows segment, will we be needing any incremental CapEx?
In miniature metal bellows, like I mentioned in my previous call, we won't be doing any further expansion except a few ancillary equipment or machinery that we require. We have redeployed the capital that we had allocated to miniature metal bellows to the liquid cooling vertical. So right now, as I see it, there will not be much CapEx that would happen at least for this financial year.
Okay, sir. One final question.
Yeah. Please go ahead.
Yeah. Sir, please continue.
Yeah. Also, just wanted to say that, with regards to the utilization of 60%, right? The 60% is on, talking about March closing, which would mean that by March, we expect that in the month of March, we will be hoping to achieve 60% utilization. Just wanted to clarify to everyone that it is not 60% for the entire year, it is for the March closing.
Okay, sir. This is on the 15,000 skids, right?
Yeah, that is correct.
Okay. All right, sir. Last question. There was an income tax demand of around INR 40 crores.
Yeah
Relating to a waiver in 2019, if I am not wrong.
Yeah.
This is almost a full year's back numbers. How confident are we on this appeal, and could you give me an expected timeline for when this will get resolved?
Yeah. This relates to, I think, financial year 2018, 2019, I think. Sorry, financial year 2017, 2018, I think. Assessment year 2018, 2019. When we took over this company, which was a stressed company, there was a waiver of interest by the banks, basically. We had done the necessary disclosures in both our financials and our income tax return. We are confident that this is something which would come in our favor in the appeal that we are going to file. Also, I would like to just tell everyone that because of time bar situation also, I think the income tax department reopened this particular assessment year, where the assessment for this particular year was already closed previously.
It was reopened, and because of time bar issues, I think they have claimed that it is an undisclosed business income, that it was clearly disclosed both in financial statements and also in the income tax return. As per our advisors and our lawyers, we are extremely confident that these things is going to be reversed in the appeals that we're going to file.
All right, sir. No problem, sir. Thank you so much.
Yeah.
Thank you. Our next question comes from the line of Aman Vij from Astute Investment Management . Please go ahead.
Good morning, sir. My first question is on the data center business, new products, ex-skids. Could you talk about when can we expect these products to be launched in the market and start contributing? As well as, I believe we are also adding a lot more products.
Yeah.
What is your strategy in terms of building a team, what it takes today, what do you see this team size in next two, three years?
In terms of the team, I think the entire team, whether we talk about sales and marketing, operations, technology, I think everywhere you will see a significant push on increasing the team, which is also pretty evident by the increase in the employee cost if you see from our financial numbers. The thrust is to build the team and to scale it up. With regards to the, I forgot your first question. What was the first question?
Yeah. When do you expect new products apart from skids?
Yeah.
We are adding a lot more new products in data center business.
Yeah. In the data center business, apart from the skid assemblies, we have our hose assemblies, which we are designing specifically for data center projects.
These hose assemblies will be used in data center applications, whether it is for the last mile cooling, or whether it is for the firefighting solutions, or whether it is for transfer of any kinds of other liquids. We have already started developing those products. It is under approval at the customer's end. Also, our annealing plant that we are planning to commission would also contribute to this because a lot of the hose assemblies in data centers have to be annealed. That would also contribute to that. These are the new products that we are developing. Some of it are under development, some of it are under customer approval. I am hoping that from the next quarter, we will start to see the sales coming in from these products as well.
Sure, sir. That is helpful. My second and final question is, sir, we have started supplying skids for domestic market, and I believe our customer will put these skids in the data center. I also think that you would have already started the process of getting some global approval because the same customer is a very big player in the global market. So where are we in that journey of getting the approval of the skids for the global market? Can we expect something in FY 2027 or mostly in FY 2028 only we'll start getting the approval and maybe supply also for the global market?
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. But it'll be difficult to give any specific number or any specific guideline on that. But yes, the idea is that the future expansion plan for us is that, apart from the business in India with regards to skid assembly, there is also a very big business internationally for the skid assemblies. So definitely, we will be working on it. Now, whether it is with our existing exclusive partner or whether it's with different other companies internationally, I think that's a decision that we will take as and when we see some inquiries coming in.
Sure, sir. Thank you for answering the question.
Thank you. Our next question comes from the line of Ashok Shah from Eklavya Invesco Family Office. Please go ahead.
Thanks for taking my question. Sir, we are manufacturing skid assembly and also metal bellows and also hose pipe. Can you just give some rough idea how much we are competitive compared to if it is manufactured outside India or it is in U.S. or something like that?
Well, in terms of skid assemblies, right now we are manufacturing and supplying only in India. Our competitiveness internationally, I will not be able to comment because we have not started to supply internationally. But obviously in India right now, we are among the only players who are manufacturing and supplying skid assembly. I think right now it is more about supply than about pricing. With regards to the bellows and the hose assembly, yes, we are the largest manufacturer in India for hose assemblies. From the economics of scale perspective, we are extremely competitive in terms of our pricing, especially if you consider the international markets where, in terms of our business, almost 60% of our overall business is exports. But if you see from the hose assemblies perspective, almost 75%-80% of the business of hose assemblies actually comes from exports.
Which means that our products, first of all, meet the quality which is requirement of the international markets, and secondly, it comes at a much better prices compared to what they would be buying locally. We definitely are competitive in that market.
So percentage-wise it could be 30%, 40% we are cheaper?
Yeah. I would say on a ballpark compare on a landed cost, we will be definitely 25%-30% cheaper. That would depend a lot on product to product, on market to market. It is slightly more in the U.S., it is slightly lesser in Europe. It is even slightly lesser in the Middle East and Africa. It depends. Internationally, it is a big market. U.S. works very differently as compared to Europe, which works very differently as compared to Middle East and Africa.
Thanks for answering. My last question is regarding we have got this group company. Are there any plan to merge it to get some economy of scale or something like that? Can you explain what are the business we are doing there?
Well, we have other group companies, but I think since this call is specifically for Aeroflex Industries, I will limit my answer to Aeroflex Industries itself. If you have any other questions on Aeroflex Industries, I will be able to answer. With regards to the group companies, we can discuss it offline.
Our management will be involved in that managing other companies also. That is why my question.
No, sir. Right now I am managing Aeroflex Industries.
Okay. Sir, thanks for answering and very best wishes for current year. Thank you, sir.
Thank you. Thank you very much.
Thank you. Our next question comes from the line of Akshay from AK Investment. Please go ahead.
Hi, sir. Thanks for taking my question. First of all, congratulations for the great set of numbers. Sir, specifically for the other business, excluding the skid assembly, what type of growth are we seeing in this year? If you can specify about the EBITDA margins, consolidated EBITDA margin for FY 2027, that would be very helpful.
Yeah. In terms of the business, the overall growth in the business, I think if you see in this quarter, we have grown by almost more than 35%. Our aim is to have a similar growth in the next few quarters as well. In terms of our EBITDA margins, last year we had an EBITDA margin of 22.5%. I think this year, the full year target is to have an EBITDA margin of around 23% in terms of EBITDA. Our aim is that ultimately over the next couple of years, the EBITDA margin should reach to about 25% annually.
Okay, sir. Specifically for skid assembly, what type of EBITDA margin currently are we enjoying in skid assembly for data center business?
We will not be able to comment on specific EBITDA margins for specifically skid assembly. Reason being that we are working with just one customer right now. We will not be able to share that on public forum. But I can say that the overall margins for skid assemblies is in line with the average margins of the company.
Okay. What type of ASP can we expect in this year or going forward for the next two to three years for the average selling price for a skid assembly? Currently, for this year, we had around 3.4 lakh.
Yeah. Typically, skid assemblies, there is a wide range with regards to per skid. Like I mentioned, the wide range is because the different data centers have different specifications and different requirements. I would say to consider an average, I think INR 3 lakh- INR 3.2 lakh would be an average that we can consider in terms of the average selling price for a skid assembly.
Okay, sir. Thank you so much, and all the best for the future.
Thank you so much.
Thank you. Ali's question comes from the line of Maitri from Sapphire Capital. Please go ahead.
Yeah, hello. Good morning, and how are you doing?
Yeah. Good morning.
Yeah. So congratulations on the set of numbers. A few questions from my side, quickly on the cooling skid. So you mentioned that you'll reach close to 60% utilization on the 15,000 capacity by March, so that's close to a 700 unit number just for the month of March. So how do you see the volumes of skid assembly kind of panning out for FY 2027 and maybe FY 2028 as well, if you could guide?
If you want to give a volume specific number, like I mentioned, skid assembly, right now we are at about. So last financial year, we sold about 1,517, right?
Correct.
Actually, the plan for this year is to, which is scaled it up to 6,000 and then for further scaling up to 10,000 by the next quarter. The idea is, like I said, to reach by March 2027, to reach about 60% utilization for that particular month. That's the aim that we have right now. Obviously, I think one year is a big time. A lot of things can change for the good. Last year same time, we did not even have skid assemblies as part of our business.
Correct.
We just ventured into it. And this year itself, it's now contributed about 5% of our business. And I think, I expect that the contribution of this business in the current financial year would be close to, I would say, anywhere between 20%-20%-
I'm sorry, I lost you.
business.
I couldn't hear the last part.
20%-22% contribution-
Right
of the entire business would be through skid assemblies.
In the liquid cool. That's great.
Yeah.
Also secondly, on the metal bellows, you said you had an INR 8 crore revenue figure for FY 2026. How do you expect that scaling up? Because I think the margins in metal bellows are the best of all of your products currently.
How do you expect that business to kind of scale up in the next two years? How much contribution you expect coming from metal bellows specifically?
Yeah. I think this year has, at least the start of the year was a bit of a challenge for the metal bellows division. Specifically, due to the fact that we were expecting big business to come in from the U.S. and the tariff actually played a spoilsport specifically for the metal bellows business because that was a new vertical for the company. But if you see that over the past couple of quarters, we have started to see the traction. We are at an ARR right now of about INR 12 crores right now at an ARR. We are looking to grow that significantly over the next two years so that we reach at least 50%-60% of our capacity utilization. Metal bellows definitely has the best margins as compared in relation to all our products.
But the sales cycle in metal bellows is slightly longer as compared to our other products.
Okay. And the 50%, 60% capacity utilization will you achieve in that two-year time frame? That is what we are kind of expecting.
Yes. That is the target, between two to three years, yeah.
Okay. And the current utilization for metal bellows for 2026 is at what level?
Very low. I do not have the exact figures, but yeah, I think extremely low, less than 20%.
At that kind of peak utilization, what sort of revenues could you achieve on the metal bellows side?
I think at the peak utilization of the metal bellows, I think we would reach about INR 80 crores at the top utilization, the maximum utilization.
That is close to 85% utilization.
Yeah, about. Approximately.
Okay. That is great. Again, you said that we are targeting the 20%-22% from the liquid cooling. How do you see the proportion of the business vertical kind of changing? Where do you see the assemblies and the metal bellows kind of having a proportionate in the sales going forward? Because this, I think they contributed close to, I think 52%-53%.
Yeah. I think obviously-
How do you see that playing out?
The hose assemblies would continue to contribute the major portion of the business of the company for the next few years, for sure, because that is the core business right now. We will see over the next few years, the percentage of contribution of skid assemblies would increase year on year. Obviously, the reason is because we are expanding our capacity in that particular segment, and this is a segment where we see a huge opportunity being there right now. We want to take the full advantage of that. The contribution of skid assemblies would definitely continue to grow to our overall business. I would say at least for the next two to three years, I think hose assemblies would still be the major contributor to the business.
Okay. That is great. On the skid assemblies, you said you are looking for some global sales. This will be through the exclusive client we have, or are we looking to tie up with another company based in U.S. that is also selling in U.S.? How do you see that kind of planning out?
Like I said, right now we have not finalized anything. We are open to exploring all opportunities.
Right now we do not have any fixed plan that we would go only on this route. Right now we are keeping pretty flexible on that.
Okay. This is feedback and capacity, you are sure that-
I'm sorry to interrupt you, ma'am, but can you please restate thank you.
Thanks, ma'am.
Our next question comes from the line of Jai Chauhan from Trinetra Asset Managers. Please go ahead. I'm sorry, but the participant has left the queue. We'll move over to the next participant. Our next question comes from the line of Muskan from Niveshaay . Please go ahead.
Hello. Yes. Thank you for giving the opportunity. Recently in U.S., they have announced the Section 232 tariff. What is the impact of that on our business?
The 232 tariff was prevalent before as well. But right now on our product, the tariff has been reduced, with effect from February, I think about 15 in the middle of February approximately. Right now the tariff on our products has been lowered. We do not have any issues of tariff as such.
Yes. But what is the percentage of tariff currently on our products?
I think it is around 15%, but I have to just double-check. I think in the range of between 10%-15%.
Okay.
Yes.
Okay. Thank you.
No worries.
Thank you. Our next question comes from the line of Prem Luniya from Astute Investment Management . Please go ahead.
Hello, sir. Congratulations on the numbers. Most of the questions are answered. I just wanted to understand, can you just reiterate the complete company guidance for the year, both ex-skids and on the base business?
Well, like I mentioned, with regards to the capacities that are coming up right now, I think we expect the last quarter we grew at more than 35%, and I think on a yearly basis, we expect to achieve that kind of a growth. Primarily being that we have significant capacities which will be commissioned at the start of the year, and which will help us to scale up the business. Obviously, skid assemblies would play a significant role in that growth, naturally, because we are expanding significantly on that. But yeah, you can say about 35% odd growth is something that we are looking at in the-
Sure. On the base business, what would be the contribution for the base business? Base business growth would be around what range?
Base business growth would be somewhere in the range of about 15%-20%.
Okay. Sure. I just wanted to know, as we are expanding into new products and data center, would it only be products which will be developed in-house, or maybe we are also looking at some acquisitions to acquire some capabilities?
We are open to that. In India right now, there are not many opportunities in companies in this particular space because it is a very new space in India. Internationally, there might be, but we are open to that. Not finalized or not finalized anything as yet.
Sure, sir. Thank you so much.
Thank you. Our next question comes from the line of Jai Chauhan from Trinetra Asset Managers. Please go ahead.
Hello. Good afternoon. Thank you for the opportunity. I just have one question. Sir, I just wanted to understand some miniature bellows players seem to operate at materially high EBITDA margins than 20% or 30% that we are targeting. I just wanted to understand, is the gap mainly due to product mix, customer qualification, maturity, utilization? I just wanted to understand, over the medium term, if Aeroflex moves into more mission-critical export OEM bellows and assemblies, can the margin profile move above the current 20% or 30% that you have guided?
The margin in metal bellows, 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? That naturally comes with most businesses. These three things are critical factors. Obviously, as we move our products into higher end, for example, applications such as AI infrastructure, data center, plus also some kind of ancillary to aerospace industries, definitely margins over there are much higher than other conventional industries.
Makes sense. Basically the industry that we are targeting at the moment, we would make approximately the margins that you mentioned, 28%-30%. But obviously, if we move to better industries and learning curve according to scale, margins can get better, right?
They can get better, but obviously, it depends on the industry that we are entering into.
Got it. Makes sense. Thank you. That is all my side.
Thank you.
Thank you. Ladies and gentlemen, due to the time constraint, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
Thank you so much. Thank you to everyone who has joined the call. If I have not been able to answer anyone's questions or if you have any further questions that you would like to ask, you can get in touch with SGA, who is our investor relation partner. Also, you can get in touch with the management to get your queries answered. Thank you so much. I would just like to also thank the entire team at Aeroflex Industries, who have done a great job to achieve the targets that we had set out at the start of the year, despite the initial hiccups that we had and despite all the geopolitical issues that have happened in this entire year. I would like to congratulate and thank the entire team at Aeroflex for the same.
Just would like to tell everyone that, yes, we are in an industry which is at a high growth. We are expanding our capacity and expanding our capabilities every year. We look forward to your support in the future as well. Thank you.
Thank you so much, sir.
Thank you.
Ladies and gentlemen, on behalf of Aeroflex Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.