INOX India says U.S. space order should lift FY28 margins

INOX India Limited said on November 4, 2026, that its more than Rs 1,000 crore U.S. aerospace order should improve FY28 margins because at least 80% to 90% is expected to be executed next year, the equipment is custom-built, and freight is outside INOX India’s scope.

Why does INOX India expect the U.S. space order to lift margins?

INOX India expects margins to improve because the U.S. space order involves complex, custom-built cryogenic equipment rather than standard tanks. Management said the equipment was being designed for this application for the first time, reflecting requirements associated with launches of heavy-payload satellites. It said margins on the order are relatively better than on standard products, where competition is broader.

The contract includes 16 cryogenic subcoolers and 16 tanks with capacity of 1,500 cubic metres each for liquid oxygen and liquid methane storage. Management said the tanks can weigh up to 450 tonnes. The subcoolers lower the temperature of liquid oxygen, or LOX, and liquid methane before transfer to propellant tanks, enabling large liquid volumes to be handled at high flow rates.

The delivery terms also separate the U.S. contract from freight-related pressures reported during Q2 FY27. Management said the U.S. aerospace customer contract is on an ex-works basis, meaning transport and logistics costs are for the customer’s account. It described the Bahamas order as free alongside ship, or FAS, delivery, under which equipment was placed near the port or jetty rather than transported overseas by INOX India.

How much of INOX India’s space backlog comes from the U.S. customer?

INOX India said the U.S. customer’s project, covering LOX systems, subcoolers and tanks, is worth more than Rs 1,000 crore and accounts for its approximately Rs 1,100 crore space-sector order backlog. Total order backlog stood at Rs 2,268 crore as of September 30, 2026, placing space orders at close to half of the reported backlog.

Management gave a more detailed mix within the space backlog, saying subcoolers account for about 60% to 70% of it. The order includes 12 subcoolers for LOX and four for methane. That mix indicates that the higher-complexity heat-exchange equipment, rather than storage tanks alone, is the principal component of the U.S. project.

Exports accounted for 72% of the Rs 2,268 crore total backlog as of September 30, 2026. Management also said 30% to 40% of the overall backlog consists of standard products, with the balance comprising custom-built products. It distinguished standard equipment, where worldwide competition can require competitive pricing, from non-standard projects requiring specialised engineering, execution and project-management skills.

When will INOX India recognise revenue from the space contract?

INOX India expects 10% to 15% of the U.S. aerospace order to be completed by the end of FY27, with at least 80% to 90% executed in FY28. In a later response, management estimated that 15% to 20% would finish in FY27 and said it would aim to complete the balance by March 2028, although about 10% could move beyond that date.

That timetable makes FY28 the main period for revenue conversion from the more than Rs 1,000 crore order. Management said it had already dispatched two tanks for the U.S. customer and expected dispatches for the project every second or third month. It also said the equipment would be manufactured at the Savli facility, where it expanded capacity two years earlier and has 50% space available.

The project carries execution demands despite a customer-approved final design. Management cited imported materials, thick forgings, multiple-hole drilling, orbital welding, cleanliness requirements and testing as key workstreams. It said these processes are familiar to INOX India and that it is addressing the risks through planning, approved material suppliers, trained staff and quality controls.

What do INOX India’s current margins and financial results show?

INOX India reported Q2 FY27 total income of Rs 467 crore, up 26.6% year on year, while earnings before interest, tax, depreciation and amortisation, or EBITDA, rose 10.8% to Rs 100 crore. Reported EBITDA margin was 21.3%, and profit after tax was Rs 66 crore, up 7.8%, with a 14.2% margin.

For H1 FY27, total income reached Rs 849 crore and EBITDA was Rs 189 crore, both described by management as half-year records. The H1 EBITDA margin was 22.3%, compared with 21.3% in Q2 FY27, while profit after tax was Rs 127 crore and the profit-after-tax margin was 14.9%. Management said H1 performance remained within its expected margin range.

Management attributed the Q2 margin pressure to a mix of product pricing, geopolitical uncertainty, logistics costs and credit issues, rather than a structural change. It said competitive pricing had affected some standard-equipment sales, whereas the U.S. space contract is custom-built and protected from freight costs under its ex-works terms.

What could determine whether INOX India secures follow-on space work?

INOX India said the U.S. contract is the customer’s first requirement and that three or four further projects are in the pipeline, but it did not disclose order values or award dates. Management said the prospect of further work depends on completing the current order to the required quality and schedule, alongside its engineering capability, customer support and prior deliveries.

Management also pointed to India’s private space market. It said INOX India is working with the top five private startup players, has delivered equipment to almost four of them, and sees their combined projected opportunity at about Rs 2,000 crore to Rs 3,000 crore over three to five years. These are customer projections rather than confirmed orders.

The company is awaiting outcomes on public-sector opportunities as well. It said it had bid for the Indian Space Research Organisation’s semi-cryogenic engine test facility, while a tender for a third launch pad was expected by management in the coming months. Neither opportunity was included in the reported Rs 2,268 crore backlog as a confirmed order.

Conclusion

INOX India’s FY28 margin expectation rests substantially on execution of a more than Rs 1,000 crore U.S. aerospace project that management says is custom-engineered, relatively higher margin and insulated from freight costs. Its planned FY28 conversion differs from Q2 FY27, when pricing and logistics affected profitability, even as H1 EBITDA margin was 22.3%.

The next milestones are the proportion completed by March 2027, the pace of recurring dispatches and management’s effort to finish most of the order by March 2028. Investors should also watch whether the customer’s additional projects, projected Rs 2,000 crore to Rs 3,000 crore private Indian space opportunity, or pending Indian Space Research Organisation tenders turn into booked orders.