1. At a Glance
Aeroflex Industries is trying to make flexible metallic hoses sexy—and surprisingly, it’s working. With a debt-free balance sheet, a 45% 5-year profit CAGR, and global expansion plans, the stock is coiling up for a strong industrial leap. But is it stretched too thin at 50x PE?
2. Introduction with Hook
Imagine a stainless-steel snake slithering through oil refineries, spacecraft engines, and fire-fighting systems. That’s Aeroflex. Not the most glamorous job, but it’s the backbone of industrial fluid systems.
- Net profit CAGR (5Y): 45%
- Stock up ~39% in 1 year, even after IPO frenzy faded.
- And they’ve got 2,777 SKUs—even your local kirana store isn’t that organised.
3. Business Model (WTF Do They Even Do?)
Aeroflex makes metallic flexible flow solution products—think: hosepipes, but made of stainless steel, that don’t leak or die under pressure (unlike crypto startups).
Revenue Channels:
- Exports: 80%+ revenue from 80 countries (Europe & US-heavy)
- Products: Corrugated hoses, braided hoses, interlock hoses
- Applications: Aerospace, pharma, oil & gas, fire safety
Subsidiaries
- Acquired Hyd-Air Engineering for growth
- Shut down UK arm in Oct 2024 (cost rationalisation)
It’s a classic “boring is beautiful” business.
4. Financials Overview
| Year | Revenue (Cr) | EBITDA Margin | Net Profit (Cr) | EPS | ROE |
|---|---|---|---|---|---|
| FY20 | ₹144 | 15% | ₹5 | ₹2.05 | — |
| FY22 | ₹241 | 20% | ₹28 | ₹12.03 | — |
| FY24 | ₹318 | 20% | ₹42 | ₹3.23 | 17% |
| FY25 | ₹376 | 21% | ₹53 | ₹4.06 | 16.6% |
Key Observations:
- Margins are stable, profits growing.
- Return ratios are healthy.
- Almost debt-free post FY24.
5. Valuation
At 50.8x trailing PE, you’d expect them to be building the SpaceX launchpad. But with consistent export-led growth, valuations may stay sticky.
Fair Value Range:
- P/E-based: 30–35x FY26E EPS of ₹5.2 → ₹156 to ₹182
- EV/EBITDA-based: 20x FY26 EBITDA of ₹95 Cr → FV around ₹170–₹190
- PEG: ~1.1x based on 45% profit CAGR = Reasonably priced growth stock
EduInvesting Verdict: The stock is priced like it’s on a stainless treadmill—running hard, but no cooling-off yet.
6. What’s Cooking – News, Triggers, Drama
- 🔥 Hyd-Air acquisition: Value-accretive, complements portfolio
- 🏭 Capacity expansion: To 16.5 million meters/year
- 🧨 Debt-free as of Sep 2023 – flexing hard
- 📉 IPO Hype hangover: Stock dipped post listing high of ₹272
- 📊 QIPs & Fundraising: Raised ₹400 Cr recently for expansion
7. Balance Sheet
| Particulars (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 23 | 26 | 26 |
| Reserves | 91 | 267 | 317 |
| Borrowings | 45 | 0 | 1 |
| Fixed Assets | 56 | 83 | 172 |
| Total Assets | 214 | 375 | 427 |
Key Takeaway:
- Net cash positive
- Capex-funded via equity, not loans (rare sight in India)
8. Cash Flow – Sab Number Game Hai
| Particulars (₹ Cr) | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| CFO | ₹12 | ₹32 | ₹7 | ₹44 | ₹27 |
| CFI | ₹-3 | ₹-13 | ₹-9 | ₹-64 | ₹-74 |
| CFF | ₹-10 | ₹-14 | ₹0 | ₹90 | ₹-3 |
| Net Cash Flow | ₹-1 | ₹5 | ₹-2 | ₹70 | ₹-50 |
Takeaway:
- Strong internal accruals
- High investment in capacity = future bets
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 34% | 26% | 22% |
| ROE | 20% | 17% | 16.6% |
| OPM | 20% | 20% | 21% |
| Debtor Days | 91 | 109 | 113 |
| CCC (Days) | 132 | 116 | 129 |
Verdict:
Efficiency slipping a bit with scaling, but still miles better than the industry median.
10. P&L Breakdown – Show Me the Money
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales | ₹269 Cr | ₹318 Cr | ₹376 Cr |
| EBITDA | ₹53 Cr | ₹62 Cr | ₹80 Cr |
| Net Profit | ₹30 Cr | ₹42 Cr | ₹53 Cr |
| EPS | ₹2.64 | ₹3.23 | ₹4.06 |
Observation:
Every number here has done more yoga than your New Year resolution. Strong, lean, and moving upward.
11. Peer Comparison
| Company | P/E | ROE | Sales (Cr) | PAT (Cr) | OPM | Mcap (Cr) |
|---|---|---|---|---|---|---|
| Aeroflex | 50.8 | 16.6% | ₹376 | ₹53 | 21% | ₹2,676 |
| Ratnamani | 37.1 | 16% | ₹5,186 | ₹542 | 16% | ₹20,125 |
| APL Apollo | 62.0 | 19.4% | ₹20,689 | ₹757 | 5.8% | ₹46,978 |
| Jindal Saw | 9.7 | 13.7% | ₹20,828 | ₹1,473 | 16.6% | ₹14,351 |
Aeroflex is smaller, leaner, faster—but also more expensive.
12. Miscellaneous – Shareholding, Promoters
| Stakeholder | Sep 23 | Mar 25 |
|---|---|---|
| Promoters | 66.99% | 66.99% |
| FIIs | 1.13% | 0.66% |
| DIIs | 6.76% | 5.91% |
| Public | 25.12% | 26.43% |
Other Nuggets:
- Closed UK unit, consolidating ops
- Metal bellows product launched
- Expansion from 15M → 16.5M meters per year
13. EduInvesting Verdict™
Aeroflex is the type of company you’d want your daughter to marry: hardworking, low on debt, globally ambitious, and quietly compounding wealth. But it’s also the kind of stock your CA tells you is “thoda mehenga.”
That said—if it can execute on its capex, maintain margins, and scale exports—it might not remain a smallcap for long.
Just remember: flexible hoses are cool. Flexible valuations? Not so much.
Metadata
Written by EduInvesting Research | 14 July 2025
Tags: industrial products, capex stories, export leaders, debt free, midcap mania, stainless steel, smallcap india, sat group, ipo 2023
