Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

Aeroflex Industries

Key Investment thesis –> Increasing Demand of HVAC system, Large Scale Industrialization, Modernization in Agriculture and Demand from new edge industries like Aerospace, Satellite, Solar and Robotics

Read Pick1, Pick2, Pick3, Pick4, Pick5, Pick6, Pick7, Pick8, Pick9, Pick10, Pick11, Pick12, Pick13, Pick14, Pick15, Pick16, Pick17, Pick18, Pick19, Pick20, Pick21

Business

Company is one of the leading Indian manufacturers of metallic flexible flow solutions made with stainless steel used for controlled flow of all forms of substances including Solid, Liquid, and Gas. Incorporated in 1993, co. is part of Sat Industries Limited.

Product Profile:
Braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows, compensators, and related end fittings.

Exports to 89 countries across Asia, Americas, Europe and Africa, through a diversified go-tomarket model

Scalable and Customized flexible flow solution products

Current serving Major Industries

• Steel & Metal
• Oil & Gas
• Chemicals
• Sea Port Terminal Handling
• Paper & Pulp
• Pharmaceutical

Strengths :

• Extensive Promoter experience
• Employee strength -500+
• The company has 2500+ SKUs
• Strategically Located Near JNPT Port
• 80+ machine lines
• 72+ Products across various stages of Research and Development
• 14 Qualified R&D Team
• NABL Accredited Lab
• ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015 certified;
• Adherence to global standards

Revenue Breakup

Fundamental Ratios, Cash, EBITDA, PAT

ROCE asnd ROE> 20%, DE ~Nil , Free cash flow is good , Pledge is Nil

Stable OPM, Net Profit went 8X+

Promoter has skin in game + Big Shark Ashish Kacholia holding 3.6%

Triggers

Macro Trends :

▪ Global market for SS flexible hose has grown at a CAGR of 8.2% to value at approximately USD 3.3 Bn in 2022
▪ Traditionally, the demand for Flexible Flow Solutions made with Stainless Steel Corrugation was largely driven by the industrial sector – manufacturing plants and manufacturing products from chemicals to paper
▪ Between FY’18-9M FY23, over 1,840 projects (brownfield and greenfield) were completed in the manufacturing
▪ With Flexible Flow Solutions made with Stainless Steel Corrugation application being universal, this large base is believed to have supported a strong demand for the product
▪ Given the increasing preference for Flexible Flow Solutions made with Stainless Steel Corrugation in place of rubber / PTFE / polymer hoses, the demand for the former from the industrial sector would be stable

Company has worked on Capacity Expansion, value added products

Expanding our presence to:

• Electric Mobility
• Fire Sprinklers
• Solar
• Robotics
• Semiconductors
• Aerospace and Satellite

Management commentary in Q1Fy25 results

Increasing margins possibilities, Increasing orders from assemblies, Focus on value added offerings, possible inorganic Way of expansion, Acquisition

Technicals

Technical chart on 8th Sep24

Risks

PE is bit high in short term

Large working capital requirement, cash conversion cycle is bit high Exposure to volatile raw material price Acquisitions dont play as anticipated Demand dont originate as anticipated

Disclaimer – Analysis is NOT a BUY/SELL/HOLD Recommendation. It can be used for educational purposes. There can be lot of things which have been missed in analysis either due to lack of information or oversight etc.. Do your own diligence & contact your expert financial adviser before making any investment decision.

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