Every piece of defence equipment, whether it’s a naval ship, a radar station, or a data centre, faces one silent but deadly enemy: heat. If it’s not controlled, machines fail, operations halt, and missions collapse. That’s where this small but crucial defence company comes in.
For over 40 years, it has quietly protected India’s strategic platforms by keeping them cool under the harshest conditions. Today, as India pushes deeper into Aatmanirbhar Bharat, this specialist is emerging as a surprising beneficiary.
With a market capitalisation of Rs 780 crore, the shares of Shree Refrigerations Ltd are currently trading at Rs 218 per share, down 2 percent from its previous day’s closing price. Post listing it delivered a return of 25 percent.
About the Company
Shree Refrigerations has been one of the top defence manufacturers in India for over 40 years, producing advanced refrigeration and HVAC (Heating, ventilation, and air conditioning) systems for the Indian Navy and other strategic defence sectors. The company is the go-to source for designing and engineering marine chillers, radar cooling systems, data center cooling units, and heat exchangers, essentially, products that have to work efficiently even in harsh sea environments.
Moreover, it is the only Indian company that the Navy has registered in three major categories: refrigeration plants, turnkey HVAC solutions, and electrical control panels. Apart from cooling systems, Shree Refrigerations is also involved in the fabrication of heavy components and the production of specialized electrical panels that are used in large defense platforms. This makes the company a significant player in the Indian defense manufacturing ecosystem, which is rapidly expanding.
In simple terms, imagine big Navy ships and important machines that get very hot when they work, Shree Refrigerations makes special “super-coolers” that help keep these ships and machines from overheating so they can work safely. Just like how a fridge keeps your food cold, their machines keep Navy equipment cool, but much bigger, stronger, and built to survive the ocean.
The company enjoys solid collaboration with significant Defence PSUs such as Mazagon Dock Shipbuilders, Hindustan Shipyard, and GRSE, which enables it to obtain a stable flow of high-value projects. It has two manufacturing facilities, a 20,000 sq. ft. facility which is self-owned and a 17,000 sq. ft. leased unit, through which it can extend sufficient capacity for the smooth delivery of specialised defence equipment.
Competitive Strengths and Weaknesses
Shree Refrigerations has complete control over quality, cost, and delivery schedules thanks to its in-house manufacturing. With the help of a robust after-sales team that guarantees dependable service and consistent revenue, the company also excels at providing customized HVAC and chiller solutions. Its position in the defence and marine cooling industries is further reinforced by its technology partnerships, extensive product line, and stringent quality standards.
However, the company’s weaknesses include a significant reliance on defence contracts, lengthy revenue cycles, and a high requirement for working capital. It also relies on key suppliers for certain critical materials, which can affect timelines and margins. Its advantages put it in a strong position for future expansion in spite of these obstacles.
Q2 Highlights
Shree Refrigerations reported a core revenue of Rs 50 crore in H1 FY26, a decline of 1 percent as compared to Rs 51 crore in H1 FY25. However, it grew by 6 percent from Rs 48 crore in H2 FY25. It derives a staggering 97 percent from its Products division, and the remaining 3 percent is derived from Other services.
Coming to its operating profit, it reported an EBITDA of Rs 5.7 crore in Q2 FY26, a decline of 63 percent as compared to Rs 15 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it recorded a decline of 51 percent from Rs 11.5 crore. Additionally, EBITDA margins declined significantly by 1,907 bps in this quarter, to 11.2 percent from 30.3 percent last year.
Regarding its profitability, it reported a net profit of Rs 1.5 crore in H1 FY26, a staggering decline of 82 percent as compared to Rs 8 crore in H1 FY25. Additionally, it recorded a decline of 68 percent from Rs 4.7 crore in H2 FY25. Also, PAT margins declined significantly by 1,337 bps in this quarter to 2.9 percent from 16.3 percent YoY
Shree Refrigerations’ margins fell temporarily because the company is involved in more onsite-heavy HVAC projects that require large teams and have a longer billing cycle.
To get ready for the new orders, they increased their workforce from 247 to 323 people, which led to higher costs in the first part of the year. Because these employee and project expenses are recorded now, while the revenue will be recorded later, the margins are temporarily lower. When these projects move forward and billing speeds up in H2 FY26, margins will probably rebound.
As of FY25, Shree Refrigerations has a total order book of Rs 327.6 crore, which is 3.3 times of FY25 revenue, giving the company a very high visibility of future growth. Leading the order book is the HVAC segment at Rs 190.8 crore, followed by AC plants worth Rs 58.3 crore, refrigeration plants at Rs 29.3 crore, and Spares at Rs 29 crore. Turnkey projects contribute Rs 15.9 crore, Chillers add Rs 2.95 crore, and other orders make up Rs 1.31 crore. Such a strong pipeline places the company in a very good position for the next few years.
Future Outlook
Shree Refrigerations is upgrading its technology and expanding into the fast-growing sectors to accomplish strong future growth. The company is entering into partnerships to bring advanced cooling technologies and is investing a lot in R&D to make more efficient and high-performance systems. Also, the company is becoming more and more after-sales support so that customers will have service, maintenance, and long-term system care, which is very important in the defense and data-center environments.
In order to fulfill the increasing demands, Shree Refrigerations is going to increase its manufacturing capacity by a new 50,000 sq. ft. greenfield plant, which can be extended to double its size. This will facilitate the speeding up of inspections, enhancing delivery timelines, and supporting large defense orders.
The company, with a definite move to high-growth sectors such as data centers (with a tie-up with Canada’s Smardt for oil-free chillers). It is forecast to grow at about 50 percent CAGR during the next 3–5 years and keep the strong EBITDA margins of 20–22 percent in the long run.
Written by Satyajeet Mukherjee
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