Aeroflex Industries triples liquid cooling capacity 2026

Capacity jump kicks in from April 1, 2026

Aeroflex Industries has increased production capacity for liquid cooling SFN skid assemblies by 300% to 6,000 units per year, effective April 1, 2026. The company said it plans a further step-up to 15,000 units annually by June or July 2026. The move comes as India’s data center build-out expands alongside rising demand for AI and high-performance computing. Aeroflex’s liquid cooling products sit in a segment that is becoming more relevant as rack densities rise and air cooling faces limits in specific high-heat applications. The company positions this as an extension of its manufacturing capabilities in precise flow control systems. Aeroflex Industries is a division of Sat Industries Limited. It is known for metallic flexible flow solutions such as stainless steel corrugated hoses and assemblies.

What exactly is being scaled up

The capacity increase is focused on liquid cooling SFN skid assemblies, which are part of liquid cooling infrastructure used in data centers and AI systems. Aeroflex reported that in Q4 of FY2025-26 it sold 571 units of these components. The immediate three-fold increase to 6,000 units annually is intended to address current demand, while the targeted 15,000 unit run-rate is positioned as the next milestone. Separately, the company has described its liquid cooling offering as including skid assemblies and advanced flow control components for high-performance liquid cooling applications. Aeroflex has also indicated that it is supplying manifolds and skid assemblies for this segment. The first commercial dispatch during a reported quarter was highlighted as a step toward diversification and repeat orders in mission-critical applications.

Demand drivers: AI, HPC, and the thermal management shift

Aeroflex links its expansion to the faster build-out of AI infrastructure and high-performance computing, where thermal management is a design constraint. The provided material also states that liquid cooling is increasingly replacing air cooling for certain AI chip and data center use-cases. A separate market commentary in the same material pegs the global liquid cooling market at about $1 billion and says it is growing at a 33% CAGR, with an implication of significant scale-up over the next six to seven years. Against that backdrop, Aeroflex is positioning itself as a domestic manufacturing supplier for a niche, engineering-heavy product category. The company’s stated approach is to leverage its history in flexible flow solutions to produce reliable, precise assemblies required for advanced cooling loops.

Board-approved capex plan and how it is funded

In December 2025, Aeroflex’s board approved a ₹97.56 crore plan to expand liquid cooling skid capacity to 15,000 units per year by June 2026. The same plan also covered robotic welding lines, automatic welding stations, and an annealing plant. Funding was described as a mix of ₹42.56 crore from internal accruals and ₹55.00 crore via a preferential issue. The preferential issue involves 30,10,398 equity shares priced at ₹182.70 per share and was to be placed before shareholders at an Extraordinary General Meeting scheduled for January 15, 2026. Investor Ashish Kacholia was named among the allottees, with his holding expected to rise from 25,98,080 shares (2.01%) to 30,08,589 shares (2.27%) after the issue, as per the provided details.

Automation and commissioning timelines beyond skids

Along with skid capacity, Aeroflex has discussed automation initiatives in its core manufacturing lines. The robotic welding lines and automatic welding stations for flexible stainless-steel hose assemblies were described as automation projects that may not increase capacity but aim to improve the assembly process. The annealing facility was targeted for commissioning by December 2026. In the same set of disclosures, the expansion to 15,000 skid units per annum was also referenced as being expected to be commissioned by June 2026. These timelines matter because they indicate when the company expects scaled output and process upgrades to come online.

Recent financial and operating datapoints disclosed

Aeroflex reported revenue of ₹120.89 crore for Q3 FY26, a 21% year-on-year increase, along with an EBITDA margin of 23.59%. For FY2025, total revenue was ₹378.76 crore, with an EBITDA margin of 21.54%. In another reported quarter, the company’s consolidated net profit rose 4.25% to ₹14.23 crore while revenue from operations increased 16.72% to ₹110.87 crore in Q2 FY26 compared with Q2 FY25. A separate performance note also said total income in Q2 FY26 was about ₹111.00 crore and EBITDA about ₹26.00 crore with a margin of about 23.5%. These figures provide context on profitability while the company invests in a new growth vertical.

Tax demand notice: ₹41.76 crore under appeal

Aeroflex disclosed that it received a tax demand notice of ₹41.76 crore from the Income Tax Department for assessment year 2018-19. The demand relates to disallowed claims tied to working capital loan interest waiver. The company said it intends to appeal and expects no material financial impact, though the outcome remains an item to track. Aeroflex also mentioned that there was a delay in disclosure due to the festive holiday period, and that escalation was initiated once personnel returned. For investors, this becomes a monitoring point alongside the execution of the capacity expansion.

Competitive landscape in India’s liquid cooling market

The company faces multiple competitors in liquid cooling solutions in India, based on the provided list. Refroid Technologies is cited as focusing on indigenous liquid immersion cooling. Stulz India is described as offering integrated liquid cooling infrastructure for high-performance computing. Delta Electronics India is mentioned as providing a range of cooling systems. Global firm Mersen is cited as designing liquid-cooled cold plates. This mix suggests competition across both system-level infrastructure and component-level designs, making execution, quality, and customer relationships key differentiators.

What investors are watching as output scales up

Several checkpoints stand out in the provided information. One is progress toward the second phase expansion to 15,000 units per year by mid-2026. Another is whether SFN skid assembly sales volumes rise meaningfully from the reported 571 units in Q4 FY2025-26 as capacity increases. Investors are also likely to track the contribution of the liquid cooling vertical to overall revenue, especially as the company described it as a value-added segment. The company also referenced an exclusive contract and indicated increasing demand, while a separate note mentioned a fresh order of around ₹7.8 crore in October 2025 for advanced liquid cooling components under a global arrangement. Finally, the tax demand appeal outcome remains an explicit watch item mentioned by the company.

Key facts at a glance

Valuation and expectations highlighted in market commentary

The provided material also included market commentary on valuations and balance sheet metrics. Aeroflex was stated to be trading at about 64x P/E versus an industry median of 16x, and described as practically debt-free with a 0.00 D/E ratio. Such datapoints, when paired with a tight mid-2026 execution timeline for capacity and process upgrades, can raise the bar for delivery on volumes and quality. The same set of notes also referenced the need to avoid delays in new robotic welding lines by June 2026, while other company-linked disclosures place automation project completion around December 2026. In this context, updates around commissioning, repeat orders, and mix improvement will likely be closely tracked.

Conclusion

Aeroflex’s three-fold jump in liquid cooling SFN skid capacity to 6,000 units annually from April 1, 2026 marks a clear pivot toward the data center and AI infrastructure supply chain. The next milestone is the ramp to 15,000 units per year by mid-2026, backed by a ₹97.56 crore capex plan and a mix of internal accruals and a preferential issue. Alongside ramp-up execution, investors will watch unit sales trends beyond the reported 571 units in Q4 FY2025-26 and developments on the ₹41.76 crore tax demand appeal. The next major public checkpoints include progress updates on commissioning timelines and any further disclosures on orders or supply agreements in the liquid cooling segment.