Incorporated in 1973, Ellenbarrie Industrial Gases is one of the oldest operating industrial gases companies in India, with a rich legacy of over 50 years. The company manufacture and supply industrial gases including oxygen, carbon dioxide, acetylene, nitrogen, helium, hydrogen, argon and nitrous oxide, as well as dry ice, synthetic air, fire-fighting gases, medical oxygen, liquid petroleum gas, welding mixture and speciality gases catering to a wide range of end-use industries. Oxygen formed 40.1% of total revenue from sale of gases, related products & services in fiscal 2025

The company service offerings also include project engineering services, where it leverage its extensive technical know-how for the design, engineering, supply, installation and commissioning of tonnage air separation units (ASUs) and related projects on a turnkey basis for customers across several sectors. It also offer turnkey solutions involving medical gas pipeline systems, where it assist healthcare facilities in designing, installing, commissioning, operation and maintenance of medical gas pipeline systems. In addition, it supply products and medical equipment to healthcare facilities, which include anaesthesia workstation, spirometers, ventilators, sterilizers, bed-side monitors, and lung diffusion testing machines.

Revenue from sale of gases, related products and services stood at 93.59% of total revenues in fiscal 2025 while revenue from project engineering services stood at 6.41% of total revenues.

The company had a market share of approximately 2.85% in fiscal 2025 in terms of revenue.

The company is present across multiple modalities of supply, namely onsite, bulk and packaged, whereby it offer products through a combination of supply mechanisms, including pipelines connected to its customers, cryogenic tankers and cylinders. The company classify its customers as bulk customers to whom it supply liquified gases through cryogenic tankers, package customers as to whom it supply compressed gases in cylinders, and onsite customers (including customers to whom it offer its operations and maintenance services). Revenue from bulk customers formed 66.75% of total revenue in fiscal 2025 while revenue from package customers formed 17.61% of total revenue and revenue from onsite customers was 15.64% of total customers.

The company operate nine facilities across East, South and Central India, of which five facilities are located in West Bengal, two in Andhra Pradesh, one in Telangana and one in Chhattisgarh, as of March 31, 2025. These facilities include three bulk manufacturing plants along with cylinder filling stations, two standalone cylinder filling stations, two onsite pipeline facilities in Kharagpur - one onsite facility in Kurnool and one onsite facility in Nagarnar, Chhattisgarh. It has recently undertaken an expansion of 170 TPD (tonnes per day) at its existing capacity at the site of one of its customers, a major steel manufacturing company in India, in Kharagpur, West Bengal, with effect from January 23, 2025. It operate oxygen plants in the country, with a capacity of 1,250 TPD as of March 31, 2025. It also have one facility under construction – a new plant being set up in Uluberia, West Bengal with a capacity of 220 TPD capacity of 220 TPD. Further, it has proposed to undertake additional capacity expansion through a liquid ASU and cylinder filing station to be commissioned in North India in December 2025, with a capacity of 220 TPD, and an additional plant to be commissioned in West Bengal in October 2025, with a capacity of 250 TPD.

The company portfolio of industrial and medical gases serves critical functions across industries for public and private entities, such as steel (Jairaj Ispat, Rashtriya Ispat Nigam, and a major steel manufacturing company in India, among others); pharmaceuticals and chemicals (Dr. Reddy‘s Laboratories, Laurus Labs, among others); healthcare (All India Institute of Medical Sciences, West Bengal Medical Services Corporation, Chittaranjan National Cancer Institute, among others); engineering and infrastructure (a major construction company in India, a major electrical equipment manufacturing company in India, GMM Pfaudler, and Air India Engineering Services, among others); railways, aviation, aerospace and space (Jupiter Wagons, multiple railway workshops across India and a space research organisation, among others); petrochemicals (major oil marketing public sector undertakings in India); and defence (Hindustan Shipyard, among others), which has enabled it to diversify revenue streams and limit concentration within specific industries. Further, it supply products to the Indian armed forces, including, at the Indian Air Force bases in East, South and West India, the Eastern Naval Command bases and multiple Government-owned laboratories. It also supply products to multiple railway workshops and railways hospitals across East and South India.

The key raw material for making gases such as oxygen, nitrogen and argon is atmospheric air. It utilise cryogenic air separation and VPSA (vacuum pressure swing absorption) technology to produce the industrial gases that it sell. The main working principle behind an ASU is the separation of air via its liquefying and distilling processes.

Promoters of the company are Padam Kumar Agarwala and Varun Agarwala.

The Offer and the Objects

The offer comprises of fresh issue of up to 10000000 equity shares at the upper price band of Rs 400 and 10526316 equity shares at the lower price band of Rs 380 aggregating Rs 400 crore and an offer for sale up to 11313130 equity shares aggregating Rs 453 crore at the upper price band of Rs 400 and Rs 430 crore at the lower price band of Rs 380.

The company proposes to utilise the net proceeds from the issue towards repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company amounting Rs 210 crore, setting up of an air separation unit at its Uluberia-II plant with a capacity of 220 TPD amounting Rs 104.5 crore and the balance towards general corporate purposes. The total estimated cost for setting up the Uluberia-II Plant is Rs 187.603 crore and is expected to be completed by October, 2025. As on April 30, 2025, total outstanding borrowings stood at Rs 264.209 crore.

Both promoter Padam Kumar Agarwala and Varun Agarwala has offered 5656565 equity shares for sale aggregating a total offer for sale of 11313130 equity shares. Promoter Padam Kumar Agarwala post offer shareholding will decrease to 53.3% from pre offer shareholding of 61.7% while promoter Varun Agarwala post offer shareholding will decrease to 19.5% from pre offer shareholding of 25.3%.

Strengths

The company is one of the important manufacturers of industrial gases in East India and South India, and the market leader in the states of West Bengal, Andhra Pradesh and Telangana.

The company has a diversified customer base, and in fiscal 2025 it sold its products to 1,829 customers. As of March 31, 2025, its top 5 and 10 customers have been associated with them for an average of 8.4 years and 7.7 years, respectively. Further, its revenue from operations from customers with whom it had a relationship of over 10 years during fiscals 2025, 2024 and 2023 was 39.08%, 43.60% and 43.16%, respectively. Revenue from repeat customers contributed to 85.68%, 92.22% and 90.70% of its revenue from gases, related products and services in fiscals 2025, 2024 and 2023, respectively.

The company is present across multiple modalities of supply, namely onsite, bulk and packaged, whereby it offer products through a combination of supply mechanisms, including pipelines connected to its customers, cryogenic tankers and cylinders.

The company has a robust distribution network, with the third highest number of transport tankers, cylinders and customer installations in India.

The company operates on-site gas production facilities at Kharagpur (West Bengal) and Kurnool (Andhra Pradesh), located within the premises of major steel manufacturers, under 15-year lease-cum-operation and maintenance agreements signed in 2019 and 2021, respectively. Additionally, it manages an ASU plant at Nagarnar (Chhattisgarh) for a government-owned steel company under a five-year work order dated October 6, 2023. These long-term contracts ensure stable, recurring cash flows and strengthen customer relationships through integrated operations.

India’s industrial gases market was valued at US$ 1.22 billion in 2023, rising to US$ 1.31 billion in 2024, and is projected to reach US$ 1.75 billion by 2028, growing at a CAGR of 7.5%. This growth is fueled by robust demand from key sectors such as steel, pharmaceuticals, manufacturing, defence, chemicals, healthcare, energy, and electronics. Government initiatives like ‘Make in India’ and the push for import substitution further support expansion of the domestic market.

Several of the company’s products enjoy steady demand due to their essential applications. For example, medical oxygen is vital for respiratory support in healthcare. The company also supplies nitrogen to major oil and gas clients, where it is used to enhance well pressure during exploration and to purge hydrocarbons in pipelines and tanks during refining. In niche segments, it offers synthetic air - a high-purity blend of oxygen and nitrogen - used as zero gas in environmental monitoring equipment calibration. It also provides ultra-high purity nitrogen, critical for the electronics industry, and ultra-high purity oxygen, used in R&D labs, solar cell production, and semiconductors. Additionally, the company serves specialized sectors such as defence and aerospace, underscoring its technical capabilities and diversified customer base.

Industrial gases are essential to continuous operations across sectors, making customers highly selective when choosing suppliers. Switching involves high risks and costs, especially where reliability and safety are crucial. Lengthy and capital-intensive vendor approval processes further deter customers from onboarding new suppliers, creating strong barriers to entry for new players.

Weaknesses

The company supply products to certain government entities and public sector undertakings through a competitive bidding process where the contracts are awarded on a tender basis. Any change in qualification criteria, unexpected delays and uncertainties in the tendering process may have an adverse effect on our business.

The company is subject to risks associated with its products, manufacturing processes and distribution network, owing to the hazardous nature of industrial gases.

The company is subject to strict quality requirements, regular inspections and audits, and sales of its products is dependent on its quality controls and standards. Any failure to comply with quality standards may adversely affect business prospects and financial performance, including cancellation of existing and future orders.

The company is required to obtain, renew or maintain statutory and regulatory permits, licenses and approvals to operate its business and facilities, and any delay or inability in obtaining, renewing or maintaining such permits, licenses and approvals could adversely affect business, results of operations, cash flows and financial condition.

The company is subject to stringent environmental, health and safety laws, regulations and standards. Non-compliance with and adverse changes in health, safety, labour, and environmental laws and other similar regulations to manufacturing operations may adversely affect business, results of operations, cash flows and financial condition.

The company primarily supply gases for industrial use in industries such as pharmaceuticals and chemicals, steel, dealer and retail network, healthcare, railway, aviation, aerospace and space, defence, engineering and infrastructure, petrochemicals (including oil and gas), and others (including power and energy, metal production, animal husbandry and electronics). Any decline in the demand for the end-products in such industries could have an adverse impact on business, results of operations, cash flows and financial condition.

The company do not manufacture the medical equipment that it offers as part of its project engineering services. Any defect or non-compliance with quality standards in connection with such medical equipment could adversely affect business, results of operations, cash flows and financial condition.

The company operations are capital intensive and require substantial investments in working capital and capital expenditure.

Valuation

For FY2025, sales were up by 16% to Rs 312.48 crore. OPM rose 1230 bps to 35.1% which led to 78% increase in operating profit to Rs 109.74 crore. Other income rose 73% to Rs 35.95 crore and interest cost increased 114% to Rs 17.14 crore while depreciation jumped 107% to Rs 20.72 crore. PBT increased 68% to Rs 107.83 crore. Tax expenses were 30% higher at Rs 24.54 crore. Net profit increased 84% to Rs 83.29 crore.

FY2025 EPS on post-issue equity works out to Rs 5.9. At the upper price band of Rs 400, P/E works out to be 68

Total outstanding borrowings amounted to Rs 264.209 crore as at April 30, 2025. As much as 79.5% of the debt will be repaid from the issue proceeds, bringing down interest costs substantially and boosting profit. The EPS works out to Rs 6.6 if 79.5% of its interest cost is removed, keeping all other items, including tax rate, same. The re-worked P/E at the upper price band moderates to 60.

As of 19 June 2025, its listed peers such as Linde India trades at FY2025 P/E of 126.

For FY2025, Ellebbarrie Industrial Gas Ebitda margin and ROE stood at 35.1% and 16.9% compared to 30.8% and 11.9% for Linde India respectively.