As India continues to fast-track its defence manufacturing ambitions under the “Atmanirbhar Bharat” vision, a small but sharply focused engineering firm is preparing to tap public capital markets — Shree Refrigerations. Scheduled to list on the BSE SME platform, the company offers a high-margin, defence-oriented niche play in a broader HVAC sector otherwise dominated by consumer-facing giants like Voltas and Blue Star.
Shree Refrigeration IPO review dives deep into the company’s business model, financials, IPO pricing, comparative valuation, and investment risks to help investors evaluate whether this SME IPO deserves a place in their portfolio.
1. Shree Refrigeration Business Model Analysis
Origins and Offerings
Established in 2006 and recently converted into a public company in December 2023, Shree Refrigerations is a specialist in designing and manufacturing customised chillers, industrial HVAC systems, marine refrigeration, and control panels. Headquartered in Karad, Maharashtra, the company operates a vertically integrated facility with certified quality protocols, most notably by the Directorate of Quality Assurance – Warship Projects, underlining its long-standing credibility with India’s defence ecosystem.
Its core product verticals include:
- Customised Marine Chillers (primarily for Indian Navy vessels)
- Industrial HVAC Systems
- Fabrication and Electrical Control Panels
- Aftermarket repair and maintenance services
Shree Refrigerations is among a select few SME manufacturers accredited for warship HVAC applications, giving it a distinctive edge in a tightly regulated and high-specification defence segment.
Revenue Mix and Sectoral Concentration
| Business Segment | FY25 Revenue (INR Cr) | % of Total Revenue |
|---|---|---|
| Marine Chillers | 82.79 | 83.86% |
| Industrial Chillers | 5.19 | 5.26% |
| Fabrication Services | 4.01 | 4.07% |
| Other Products & Services | 6.73 | 6.82% |
| Total Revenue | 98.73 | 100% |
With over 83% of revenues stemming from marine chillers, the company is heavily reliant on defence and naval contracts, specifically with the Indian Navy, for new ship installations and retrofits.
Additionally, in FY25, government clients contributed nearly 77% of the company’s total business, with only 23% coming from private sector enterprises.
Capacity Utilisation and Scalability
Shree Refrigerations operates below its installed capacity, a fact that could work to its advantage in an expansionary cycle:
| Product Type | Installed Capacity | FY25 Output | Utilization Rate |
|---|---|---|---|
| Marine Chillers (Seawater-cooled) | 36 units | 30 units | 83% |
| Marine Chillers (Air-cooled) | 36 units | 0 units | 0% |
| Industrial Chillers | 180 units | 70 units | 39% |
| Total Units | 252 | 100 | ~40% |
While industrial chillers operate at just 39% utilisation, air-cooled marine chiller capacity remains untapped, giving the firm scope to ramp up production without significant additional CapEx.
Order Book and Execution Pipeline
As of 25 May 2025, Shree Refrigerations had an order book worth INR 231.41 crore, nearly 2.3x its FY25 revenue, offering strong forward visibility:
- INR 152.39 crore worth of orders are scheduled for execution in FY26
- An additional INR 124.50 crore worth of bids are under evaluation
This backlog, coupled with ongoing government-backed shipbuilding and modernisation programs, suggests earnings momentum is secure for the next 12–18 months.
Strategic Partnerships & Technical Alliances
To further enhance project competitiveness, the company has signed two MoUs:
- February 2023: Turnkey HVAC and electrical works collaboration for new shipbuilding programs
- February 2020: Design and naval architecture tie-up focused on marine engineering systems
Such alliances reinforce the company’s ability to bid for complex contracts and deliver turnkey solutions.
Geographic and Export Footprint
While Maharashtra contributed 36.11% of FY25 revenues, the firm’s overall geographic diversity remains limited. Export exposure is negligible:
| Year | Export Revenue (₹ lakh) | % of Total |
|---|---|---|
| FY25 | 5.12 | 0.05% |
| FY24 | 0.12 | 0.00% |
| FY23 | 0.49 | 0.01% |
This remains a latent opportunity in a global naval HVAC market projected to reach USD 1.09 billion (~INR 9,400 crore) by 2030.
2. Shree Refrigeration Peer Comparison & Valuation: Reasonable Entry, Rich Margins
Shree Refrigerations valuations are moderate for the SME space, especially considering that many listed HVAC peers trade at much higher multiples.
Comparative Benchmark: Johnson Controls–Hitachi Air Conditioning India
| Metric | Shree Refrigerations | JCI–Hitachi AC India |
|---|---|---|
| CMP (INR) | 125 | 1,748 |
| EPS (INR) | 5.25 | 21.60 |
| P/E Ratio (X) | 23.81 | 78.0 |
| P/B Ratio (X) | 3.06 | 7.42 |
| P/S Ratio (X) | 8.75 | 1.72 |
| EBITDA Margin | 27.29% | 4.78% |
| Current Ratio | 2.68 | 1.28 |
| PAT Margin | 13.72% | 2.13% |
| ROCE (%) | 23.22% | 12.11% |
When comparing Shree Refrigerations, an SME defense HVAC player, with an established industry leader like JCI–Hitachi Air Conditioning India, the contrasts are stark — but so are the surprises.
Despite its modest scale, Shree Refrigerations delivers better profitability, efficiency, and balance sheet strength across most key metrics.
- Margins Tell the Story: Shree’s EBITDA margin of 27.29% and PAT margin of 13.72% dramatically outperform Hitachi’s 4.78% and 2.13%, respectively. This reflects Shree’s niche, custom-built product profile, especially in high-value marine chillers.
- Capital Efficiency: Shree’s ROCE of 23.22% vs. JCI-Hitachi’s 12.11% is a clear sign of stronger return on deployed capital — a rare trait in smaller industrial firms.
- Liquidity & Leverage: A current ratio of 2.68 for Shree shows strong short-term solvency, while Hitachi’s 1.28 indicates tighter liquidity. This, paired with a lower P/B ratio, indicates more financial resilience at the IPO stage.
However, one anomaly stands out: Price-to-Sales (P/S).
- Shree trades at a P/S ratio of 8.75x, much higher than Hitachi’s 1.72x. While this reflects investor optimism and forward visibility from a 2.3x order book, it also suggests the market is pricing in rapid growth — something Shree must deliver to justify the premium.
3. Shree Refrigerations Strengths and Risks: Weighing the Long-Term Tradeoff
✅ Key Strengths
- Customised Products: The company offers customised HVAC solutions, AC plants and chillers designed by experienced engineers to meet clients’ project requirements.
- Quality Standards and Certifications: ISO 9001:2015 certified and recognised by the Indian Navy, 100% product testing and adherence to quality standards in the in-house QA laboratory.
- Technology and Collaboration: Technical collaborations for naval HVAC design, the company leverages foreign expertise to deliver advanced and credible solutions for warship and submarine applications.
- Wide Range of Products: Marine chillers, refrigeration units, condensing systems, HVAC equipment and engineering fabrications for defence, chemical, pharma and printing sectors.
- Strong Leadership and Experienced Management: Led by promoter Mr. Ravalnath G. Shende, the company has experienced leadership and a team of engineers and retired defence personnel to drive growth and execution.
⚠️ Material Risks
- Indian Navy Contracts: 76.84% of FY25 revenue comes from government projects, mainly the Indian Navy. Any policy changes, budget cuts or contract delays can impact business and revenue.
- Marine Chiller Segment: Marine chillers contributed 83.86% of FY25 revenue. Lack of diversification and failure to get new clients in other industries may impact long-term growth and revenue stability.
- Bank Guarantees: Bank guarantees of INR 9.67 crore in FY25. If invoked, it can strain cash flow and affect financial health and operational liquidity.
- Underutilised Capacity: Marine AC plant capacity utilisation was 30/36 units in FY25. Inefficiencies due to low capacity use or raw material shortages can reduce margins and profitability.
- Customer Concentration Risk: Top 5 clients contributed 81.72% of FY25 revenue. Loss or reduced business from any major client can impact financial performance and operational continuity.
- Negative Cash Flows: Operating cash flows were INR (24.89) crore in FY25. Continuous negative flows can constrain working capital and impact business growth.
- State-wise Revenue Dependence: Maharashtra contributes 36.11% of FY25 revenue. Disruptions in top states can impact revenue sharply.
- Promoter Shareholding Post-IPO: Promoter holding reduces from 56.61% to 44.70% post-IPO. Lower promoter control can impact investor confidence and the stability of strategic decisions.
- Unsecured Loans: Unsecured loans of INR 4.21 crore (FY25) can be called anytime. Failure to refinance on favourable terms can strain liquidity and operations.
Conclusion: A High-Margin Play for High-Conviction Investors
Shree Refrigerations brings a defensible, capital-efficient, and profitable niche business to the public market, and at a valuation that reflects its earnings profile and growth potential without an excessive premium.
But this is not a broad-based HVAC play. Investors must remain aware of:
- Concentration risk
- Execution dependency on the government
- Modest size
- SME platform liquidity constraints
For investors bullish on India’s defence spending trajectory, and those with an appetite for specialised engineering SMEs with margin resilience, Shree Refrigerations offers a credible — albeit narrow — investment story.