Aeroflex Industries Triples Liquid Cooling Capacity

Capacity Increase and Future Targets

Aeroflex Industries has boosted its production capacity for liquid cooling SFN skid assemblies by 300% to 6,000 units annually, effective April 1, 2026. The company aims to further expand this to 15,000 units per year by June or July 2026. In the fourth quarter of fiscal year 2025-26, Aeroflex sold 571 units of these components.

Addressing AI and Data Center Growth

This significant expansion is designed to meet the rapidly growing demand for advanced cooling solutions in India's data center sector, driven by the surge in AI and high-performance computing. Aeroflex's strategic entry into this market leverages its established expertise in manufacturing precise and reliable flow control systems, a core competency honed over years in the flexible flow solutions industry.

Company Background and Previous Expansion

Aeroflex Industries, a division of Sat Industries Limited, is a recognized manufacturer of metallic flexible flow solutions, including stainless steel corrugated hoses and assemblies, serving various global industries. In December 2025, Aeroflex's board had previously approved a ₹97.56 crore plan to increase liquid cooling skid capacity to 15,000 units annually by June 2026, to be funded through internal accruals and a preferential issue.

Impact of the Capacity Boost

The immediate three-fold increase in capacity enables Aeroflex to better meet current demand for SFN skid assemblies. The planned expansion to 15,000 units signals ambitious growth targets in the data center cooling market. This strategic focus on value-added products like cooling skids is expected to strengthen Aeroflex's competitive market position, aligning with the exponential growth in AI and high-performance computing requirements for sophisticated thermal management.

Tax Demand Notification

Aeroflex Industries recently disclosed receiving a tax demand notice of ₹41.76 crore from the Income Tax Department for assessment year 2018-19. This demand is related to disallowed working capital loan interest waiver claims. The company intends to appeal this order and has indicated that it expects no material financial impact. However, the outcome of the appeal will be a key factor to monitor. The company also noted a delay in disclosing this demand due to the festive holiday period, with prompt escalation initiated once personnel returned.

Competitive Environment

Aeroflex faces competition in the expanding liquid cooling solutions market in India from several players. These include Refroid Technologies, which focuses on indigenous liquid immersion cooling; Stulz India, offering integrated liquid cooling infrastructure for high-performance computing; Delta Electronics India, providing a wide range of cooling systems; and global firm Mersen, a designer of liquid-cooled cold plates.

Financial Metrics and Sales Data

In the fourth quarter of fiscal year 2025-26, Aeroflex Industries recorded sales of 571 units of SFN skid assemblies. The company reported revenue of ₹120.89 crore for the third quarter of FY26, marking a 21% year-on-year increase, with an EBITDA margin of 23.59%. For the full fiscal year 2025, total revenue was ₹378.76 crore, with an EBITDA margin of 21.54%.

What to Watch Next

Key areas to monitor include the progress of the second phase of capacity expansion towards 15,000 units by mid-2026. Investors will also track actual sales figures for SFN skid assemblies as production ramps up and its contribution to overall revenue. The outcome of Aeroflex's appeal against the ₹41.76 crore tax demand is another significant point. Additionally, any new orders or supply agreements for the liquid cooling segment, especially from its major US-based client, and the performance of its core metallic flexible flow solutions business alongside the cooling segment, will be important indicators.