Airfloa Rail Tech IPO: From Vande Bharat to defence, company charts next growth phase

Airfloa Rail Technology has played a pivotal role in India’s rail revolution, supplying components to Vande Bharat Express, metro networks, and semi-high-speed projects. Now, the company is widening its horizon with a push into aerospace, defense, and cutting-edge drone technologies.

With its SME IPO already oversubscribed, Airfloa is positioning itself as more than a railway supplier, aiming to become a technology-driven solutions provider for India’s transport and defense future.

In this exclusive ETMarkets interview, Joint MD Mr Manikandan Dakshinamurthy discusses the company’s growth strategy, diversification plans, and what investors should watch for.

Watch the livestream video here:Excerpts:

Q. Airfloa Rail Technology has a strong foothold in rolling stock and is now expanding into high-margin areas like aerospace and defense. How do you plan to balance railway dominance with diversification?
Manikandan: Railways remain our core business, contributing over 80% of revenues. We are actively engaged in projects like Vande Bharat sleeper trains, metro expansion, semi-high-speed RRTS, and high-speed rail. India’s growth in this sector gives us strong visibility for the next 20–30 years.

At the same time, we’re scaling our defense vertical aggressively, focusing on new technology-led products. This dual strategy ensures a healthy margin mix and positions us for sustainable growth.

Q. Having supplied critical components for Vande Bharat, metros, and exports, which product lines will drive your next growth phase?
Manikandan: We are moving from being just a coach integrator to becoming a technology solutions provider. Key focus areas include automatic door systems, vacuum toilets, AI-based air-conditioning, safety and security systems.

In defense, our focus is on electronic warfare solutions. These new product lines will drive growth over the next 5–10 years.

Q. You’ve planned new capex for machinery and automation. How will this impact precision and scalability?
Manikandan: Last year, we posted revenues of ₹192 crore, and we’re targeting ₹350 crore this year. With new machinery arriving in the next 6–7 months, we aim to scale up to around ₹550 crore in FY26–27.

The capex will enhance precision manufacturing and allow us to meet growing demand across metro, Vande Bharat, and defense projects.

Q. Airfloa has been associated with the Vande Bharat program since 2018. With Indian Railways planning 400+ new train sets, how do you see opportunities evolving?
Manikandan: Vande Bharat is the next-generation platform for Indian Railways. Beyond the current contracts, over 800 additional train sets are expected in the future, including fully aluminum coaches.

This offers us a long-term runway of 15–20 years, with huge opportunities in both technology upgrades and interiors.

Q. Aerospace and defense contributed about 35% of FY25 revenue. Which specific programs are you targeting?
Manikandan: We’re focused on drones and anti-drone systems. On the commercial side, we’re developing firefighting drones, industrial-use drones, and water-cleaning drones.

On the defense side, our focus is on loitering munitions, swarm drones, and electronic warfare drones. We are also developing anti-drone systems, which are crucial for modern defense requirements.

Q. How do you see demand shaping up in drones and anti-drone systems?
Manikandan: The Government of India has already announced a ₹65,000 crore package for drones and anti-drone systems. We are actively participating in expressions of interest.

Currently, only a handful of companies are engaged in this space, leaving massive scope for growth. We are positioning ourselves as both a commercial and defense drone manufacturer.

Q. You hold approvals from HAL, DRDO, and Indian Railways, along with IRIS certification. How do these certifications give you an edge?
Manikandan: These certifications are essential to participate in high-value contracts. IRIS covers not just product quality but also process, finance, and design quality.

We also hold aerospace certifications and licenses to supply to DRDO labs, with over 50 certifications in place. This establishes our credibility with large global and domestic clients.

Q. From the ₹91.10 crore IPO, about ₹59.27 crore is earmarked for working capital, and ₹13.68 crore is for machinery. How will this strengthen execution and growth?
Manikandan: Our business is highly working capital-intensive, especially as we scale turnkey projects and technology-driven products.

We aim to increase our market share in railways from about 40% of product value per coach to 60–70%. In defense, we want to be a leading player in electronic warfare.

Our vision is to make India a hub for advanced rail and defense technologies, driving both innovation and indigenization.

Watch the livestream video here:

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