Shree Refrigerations FY26: A Strong H2 Execution Surge, an Expanding Order Book, and a New Data Centre Bet

Shree Refrigerations Limited ended FY26 with a clear split personality in performance. The first half was muted due to capability build-out and project pre-activities, while the second half delivered sharp execution-led growth. For FY26, revenue from operations rose to INR 153.55 crore, up 55.5% year-on-year. EBITDA came in at INR 32.82 crore, up 21.8%, and profit after tax increased to INR 21.40 crore, up 64.7%.

The headline, however, sits in H2FY26. Revenue in the second half was INR 103.16 crore, up 116.0% year-on-year, while EBITDA rose to INR 27.16 crore with a 26.3% margin. Net profit in H2FY26 stood at INR 19.92 crore with a 19.3% margin. Management attributed this to operating leverage kicking in after execution capacity was strengthened in H1.

What changed between H1 and H2

Management described H1FY26 as an investment phase. The company expanded HVAC execution capabilities, increased manpower for onsite execution and project management, and incurred higher employee and onsite costs. Revenue was also held back by preliminary activities tied to new defence projects, including design approvals and type testing.

H2FY26 marked the payoff. Higher execution capacity translated into faster project completion and stronger billing, resulting in both higher scale and improved margins. The company also highlighted that cash flow from operations turned positive in FY26.

Defence marine positioning and the turnkey shift

Shree Refrigerations positions itself as a defence-focused manufacturer of marine-grade HVAC and refrigeration systems, with a long relationship with the Indian Navy. A key point repeated in both the presentation and concall is its registrations across three naval segments: AC and refrigeration plants, HVAC systems, and electrical control panels. Management framed this as a competitive advantage, particularly as shipyards increasingly prefer turnkey ordering, which requires the supplier to provide both HVAC and AC plant capabilities.

The company’s installed base also supports recurring opportunity through spares, onboard inventory replenishment cycles, and lifecycle services. However, FY26 margins reflect a mix issue. The CFO stated that spares and service revenue fell to about 7% of total revenue in FY26 versus about 30% in the prior year, which contributed to the moderation in full-year EBITDA margin.

Order book visibility remains strong

As of 31 March 2026, the company reported an unexecuted order book of INR 270.77 crore, stated as about 1.8 times FY26 revenue. The closing order book composition was led by HVAC at INR 159.69 crore and AC plants at INR 61.66 crore.

Management also highlighted that working capital intensity is a core operating focus. The presentation cited working capital cycle improvement from about 570 days in FY25 to about 370 days in FY26. In the concall, management added that receivable days reduced materially, and that ongoing growth will largely require working capital funding.

Capacity expansion and data centre cooling: the next phase

The company is commissioning a greenfield expansion of about 50,000 sq. ft., expandable to about 100,000 sq. ft., with stated subsidy support under the PSI scheme of the Government of Maharashtra. In the concall, management quantified Phase 1 capex at INR 25 crore and said the plant would be up and running by June.

Alongside this, Shree Refrigerations is attempting to open a second growth engine through data centre cooling. The investor presentation mentions a technology cooperation agreement signed with Smardt (Canada) for oil-free data centre chillers. Management clarified the timeline in the concall: FY27 is targeted for a reference installation, with major revenue contribution expected from FY28. Importantly, management stated that FY27 guidance is without considering any data centre revenue.

Key investor takeaways

FY26 shows a company scaling execution capacity and converting that into a strong H2 performance. The order book provides near-term visibility, while the manufacturing expansion aims to improve throughput and delivery cycles. At the same time, risks remain visible in the form of elevated working capital requirements, commodity inflation, and margin volatility driven by the spares and services mix.

Management’s near-term guidance focuses on a 40% CAGR aspiration for the next 3 to 5 years (on the base of FY26) and an EBITDA margin band of 20% to 24%. The data centre opportunity is positioned as additive, but management’s stated timeline suggests it is still in the early stage, with meaningful revenue expected only from FY28.