Ellenbarrie Industrial Gases IPO: A Legacy Business with Renewed Growth Potential

Company Overview
Ellenbarrie Industrial Gases Limited, with a legacy of over 50 years, stands among India’s most established players in the industrial gases sector. The company manufactures and supplies a broad spectrum of gases that cater to industries like steel, pharmaceuticals, infrastructure, healthcare, and manufacturing. Its portfolio includes:

Industrial Gases: Oxygen, Nitrogen, Argon, Helium, Hydrogen, Carbon Dioxide, Acetylene

Medical & Specialty Gases: Medical Oxygen, Nitrous Oxide, Synthetic Air, Firefighting Gases, Welding Mixtures

Others: Dry Ice, LPG (Liquid Petroleum Gas)

Ellenbarrie enjoys regional dominance in East and South India and is recognized as the market leader in West Bengal, Andhra Pradesh, and Telangana in terms of installed capacity. This stronghold has positioned it as India’s largest fully domestic industrial gas company by capacity, revenue, and profitability as of FY24.

Financial Performance & Valuation
The company has demonstrated robust financial growth and margin expansion. In FY2024:

Revenue grew 31% YoY to ₹290.2 crore

Net Profit surged 61% to ₹45.29 crore

EBITDA Margin improved from 16.4% to 22.8%

PAT Margin rose from 13.7% to 16.8%

ROE and ROCE improved to 11.1% and 12.2% respectively

Debt-to-Equity stood at a manageable 0.43x

While recent capex, including a new ASU plant, has added to the company’s leverage, IPO proceeds will be used to reduce debt, which is expected to further strengthen its balance sheet. With a NAV of around ₹19/share and projected listing valuations near 1x P/B, Ellenbarrie appears conservatively priced, especially in comparison to larger peers.

Sector & Peer Comparison
Ellenbarrie is set to be listed at an EV/EBITDA multiple of ~2.9x, sharply discounted compared to Linde India (~69x). Though smaller in scale, Ellenbarrie’s financial metrics and operating margins are healthy. This valuation gap presents a potential upside if the company continues to deliver on its growth strategy.

Key clients include marquee names like Vizag Steel, AIIMS, Dr. Reddy’s Laboratories, and the Indian Armed Forces, ensuring revenue visibility and credibility.

Strengths at a Glance
Consistent revenue and profit CAGR

Strong industry relationships and regional leadership

Capital-efficient operations with improving ROE/ROCE

Limited dilution and clear deployment of IPO proceeds

Risks to Watch
Regional Dependence: High reliance on three states could pose geographic concentration risk.

Cyclical Demand: Revenues tied to economic activity in core industries.

Capital Intensity: Continuous investment needed for growth and logistics.

Competitive Pressure: Faces global players like Linde and INOX with deeper resources.

Safety & Regulation: Any operational mishap or regulatory breach could be costly.

Valuation Uncertainty: SME stock listing may face volatility; re-rating may take time.

IPO Structure & Use of Funds
Issue Size: Fresh issue of ~₹400 crore and OFS of ~1.44 crore shares

Allocation: QIBs 50%, HNIs 15%, Retail 35%

Key Utilizations:

₹176.8 crore for debt repayment

₹130 crore for a new 220 TPD ASU plant at Uluberia-II

Balance for general corporate purposes

Outlook for Investors
Ellenbarrie’s IPO offers an opportunity to invest in a niche industrial sector with growing demand. Its long-term growth strategy, driven by capex and deleveraging, is supported by stable cash flows and operational efficiency. For value-seeking investors with a mid-to-long term horizon, this IPO represents a disciplined industrial play with upside potential, especially if the company continues to scale profitably and widens its geographic reach.

Lead Managers: Motilal Oswal Investment Advisors, IIFL Securities, JM Financial

Registrar: KFin Technologies Ltd