Shree Refrigerations reported a strong 85% YoY revenue jump for H1 FY27 with margins expanding to 13.5%. Despite the growth, the company faces negative operating cash flow of INR 42 crore due to high inventory and a 250-day receivable cycle. Management maintains a 40% CAGR revenue guidance, backed by a INR 200 crore order book and expansion into the data center and industrial chiller segments.
Shree Refrigerations H1 Revenue Jumps 85% YoY
Revenue grew 85% compared to H1 FY26, while EBITDA margins expanded to 13.5%.
Reader Takeaway: Robust top-line growth is offset by significant working capital stress and persistent negative operating cash flow.
What just happened
Shree Refrigerations Ltd delivered a strong operational performance in the first half of FY27. The company scaled its manufacturing capacity with the launch of its 50,000 sq ft Unit 2, bringing total capacity to 70,000 sq ft. Despite commodity cost pressures, EBITDA margins improved to 13.5% from 11% in the year-ago period.
Why this matters
The company has set a bold revenue target of 40% CAGR, supported by a healthy pipeline in the defence sector. Management is also diversifying into high-growth areas, specifically data center cooling and industrial sub-zero chillers under the brand name 'Aquilon'.
The backstory
While the company is scaling rapidly, it reported a negative operating cash flow of INR 42 crore. Management states this is a deliberate strategy to build inventory (up from INR 54 crore to INR 80 crore) and secure trade receivables to mitigate inflation and prepare for H2 delivery cycles. The trade receivable days remain elevated at approximately 250 days.
Risks to watch
Shareholders should monitor the working capital cycle closely. With receivables at 250 days and management targeting a return to a 350-day range by year-end, liquidity management remains a key risk. Additionally, the order book has dipped to INR 200 crore from INR 270 crore at the start of the year, making H2 execution critical for meeting annual targets.
What to track next
Watch for the transition of the new industrial chiller subsidiary into commercial operations next year and the conversion of naval defence project opportunities, which typically materialize in the August-to-March window.