Ellenbarrie Industrial Gases Ltd. IPO: Key Details

Ellenbarrie Industrial Gases

• Ellenbarrie Industrial Gases is coming out with a 100% book building; initial public offering (IPO) of 2,18,39,445 shares of Rs 2 each in a price band Rs 380-400 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on June 24, 2025 and will close on June 26, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 2 and is priced 190 times of its face value on the lower side and 200 times on the higher side.
• Book running lead managers to the issue are Motilal Oswal Investment Advisors, IIFL Capital Services and JM Financial.
• Compliance Officer for the issue is Aditya Keshri.

Profile of the company

Ellenbarrie Industrial Gases is one of the oldest operating industrial gases companies in India, with a rich legacy of over 50 years. It manufactures and supplies 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. It 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, each in terms of installed manufacturing capacity, as of March 31, 2025.

The company’s service offerings include project engineering services, where it leverages 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 offers turnkey solutions involving medical gas pipeline systems, where it assists healthcare facilities in designing, installing, commissioning, operation and maintenance of medical gas pipeline systems. In addition, it supplies products and medical equipment to healthcare facilities, which include anaesthesia workstation, spirometers, ventilators, sterilizers, bed-side monitors, and lung diffusion testing machines.

It is present across multiple modalities of supply, namely onsite, bulk and packaged, whereby it offers its products through a combination of supply mechanisms, including pipelines connected to its customers, cryogenic tankers and cylinders. It has a robust distribution network, with the third highest number of transport tankers, cylinders and customer installations in India.

Proceed is being used for:

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company
• Setting up of an air separation unit at its Uluberia-II plant with a capacity of 220 TPD
• General corporate purposes

Industry Overview

The Indian industrial gases industry plays a pivotal role in supporting various sectors such as steel and other metal manufacturing, oil and gas, general manufacturing, healthcare, pharmaceuticals, chemicals and fertilizers, and food and beverage production. Prominent manufacturers in this industry include Linde, Inox Air Products, Air Liquide, Ellenbarrie, Air Water, Goyal MG Gases, etc. The market size of industrial gases in India was valued at $1.31 billion in 2024. The demand has increased at a CAGR of 6.3% during 2018-24, driven by rapid industrialization and infrastructure development, a growing emphasis on hydrogen as a clean energy source, and innovations in gas production, storage, and distribution that enhance efficiency and reduce costs. From 2023 onwards, the market size for industrial gases in India stabilized. The large domestic market is driven by government initiatives such as 'Make in India' and the increasing call for import substitution, as well as demand from sectors such as steel, pharmaceuticals, manufacturing, defence, chemicals, healthcare, energy, pharma and electronics, and their growth prospects. The demand is projected to reach $1.75 billion by 2028 with CAGR of 7.5%.

The steel industry is a major consumer of industrial gases, particularly oxygen, nitrogen, and argon, which are critical in various stages of steel production. Oxygen is extensively used in blast furnaces to improve combustion efficiency and reduce coke consumption, leading to cost savings and lower emissions. Moreover, the chemicals and petrochemicals sector is one of the critical consumers of industrial gases like hydrogen, oxygen, and nitrogen. Also, Healthcare facilities are significant users of medical grade gases such as oxygen, nitrous oxide, etc. Oxygen is critical for respiratory therapies, anesthesia, and life support systems. Nitrous oxide is used for its anesthetic properties during surgeries and dental procedures. Medical oxygen is utilized in ventilators and as a carrier gas for anesthetics. The expanding healthcare sector, with a focus on improving medical infrastructure and patient care, drives the demand for industrial gases in hospitals.

Introduced by the government of India, the PLI (Production Linked Incentives) scheme aims to boost domestic production by providing incentives to companies for additional sales of manufactured goods compared to a baseline year. Launched initially in March 2020 with three schemes, it expanded to 14 sectors in August 2023. The PLI Schemes for 14 key sectors have been launched with a financial outlay of Rs 1.97 lakh crore (over $26 billion), aimed at boosting India's manufacturing capabilities and export potential. As demand from end-use industries increases, the demand for industrial gases will also go up.

Pros and strengths

Leading manufacturer of industrial gases, well positioned to capitalise on industry tailwinds: The company has a long operating history, having commenced its operations in 1973. It is one of the oldest operating industrial gases companies India, with a rich legacy of over 50 years. It is one of the important manufacturers of industrial gases based out of East India and South India, and the market leader in the states of West Bengal, Andhra Pradesh and Telangana, each in terms of installed manufacturing capacity, as of March 31, 2025.

Comprehensive product portfolio, catering to diverse end-use industries: It manufactures a wide variety of industrial gases, including oxygen, nitrogen, argon, helium, hydrogen, carbon dioxide, nitrous oxide and acetylene, through which it services a diverse set of industries, with its products finding use in ship building, glass manufacturing, steel manufacturing, pharmaceuticals, welding, fabrication, among others, rendering their consistent supply critical to different industries. It has also been able to cater to the specific requirements of industries such as steel; pharmaceuticals and chemicals; healthcare; engineering and infrastructure; railways, aviation, aerospace and space; petrochemicals; food and beverages; energy; electronics; manufacturing; defence, through use cases.

Diversified customer base, minimizing concentration risks: It has established relationships with several Indian customers across industries through over fifty years of business operations. In Fiscal 2025, it sold its products to 1,829 customers, which represented one of the highest number of customers of any gas company in India, indicating a highly diversified customer base with limited concentration risk. Its products are used in various applications such as weapons manufacture, manufacture of ships, aircraft pneumatics, for breathing requirement of pilots while flying on training missions and for divers while diving to repair ships. It supplies to multiple bases and branches of the armed forces, who have diverse requirements. It is subject to stringent and regular audits from such government customers, thereby cementing its status as a reliable supplier.

Expansive operational and distribution capabilities across East and South India: It is a manufacturer of industrial gases based out of East India and South India, and the market leader in the states of West Bengal, Andhra Pradesh and Telangana, each in terms of installed manufacturing capacity, as of March 31, 2025. As of March 31, 2025, it operates 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. These facilities include three bulk manufacturing plants along with cylinder filling stations, two standalone cylinder filling stations, two onsite pipeline facilities in Kharagpur, West Bengal at the site of one of its customers, a major steel manufacturing company in India, one onsite facility in Kurnool, Andhra Pradesh at Jairaj’s site and one onsite facility in Nagarnar, Chhattisgarh at the site of one of its customers, a steel manufacturing company in India owned by the Government of India.

Risks and concerns

Significant revenue comes from limited customers: The company’s revenue from operations comprise (i) revenue from sale of gases, and (ii) revenue from project engineering services, where it offers assistance with the design, engineering, supply, installation and commissioning of tonnage air supply units and related projects on a turnkey basis to customers. The revenues from project engineering services are non-recurring owing to the specific nature of such projects. However, in terms of sale of gases, it has established long-standing relationships with several Indian customers across industries and in Fiscal 2025, it sold its products to 1,829 customers. The company has garnered 47.09%, 40.95% and 37.56% of its total revenue from top 10 customers in FY25, FY24 and FY23 respectively. A decrease in business from such key customers, whether due to circumstances specific to such customer or adverse market conditions or the economic environment generally, may adversely affect its business, results of operations, cash flows and financial condition.

Geographical constrain: As of March 31, 2025, of the company’s nine facilities, five are located in West Bengal. Further, a new plant that it is in the process of setting up and commissioning is also located in West Bengal. While its strategic locations in East India places it in proximity to key pharma, steel, automotive, railway wagons and locomotive companies, the geographical concentration of these facilities exposes it to regional adversities in the state. Consequently, any significant social, political or economic disruption, or natural calamities or civil disruptions in this region, or changes in the policies of the state or local governments of this region, could require it to incur significant capital expenditure and change its business strategy. While there have been no such instances in the three preceding Fiscals, it cannot assure that such instances will not arise in future.

Business is capital intensive, requiring significant working capital: The company’s operations are capital intensive and require substantial investments in working capital and capital expenditure. Its capital expenditure (pertaining to payments made for purchases of property, plant and equipment, including capital work in progress) was Rs 692.21 million, Rs 870.04 million and Rs 949.44 million in Fiscals 2025, 2024 and 2023, respectively. It has historically relied on both internal accruals and external borrowings to meet these requirements. It anticipates that it will continue to incur significant capital expenditure as it expands its operations, and upgrade its facilities. To finance its capital expenditure and working capital needs, it may need to raise additional funds through debt or equity financing. Its ability to obtain external financing on favorable terms, or at all, depends on various factors, including its financial performance, market conditions, and the general availability of credit. Any inability to raise adequate funds in a timely manner, or on acceptable terms, could adversely affect its business, results of operations, cash flows, and financial condition.

Stiff competition: The company’s marketplace to continue to be highly competitive. In addition, it encounters further consolidation in the markets in which it operates. Some of its competitors may have longer operating histories, and, when viewed globally, larger customer bases and significantly greater financial, sales and marketing, manufacturing, distribution, technical and other capabilities than it does. These competitors may be able to adapt more quickly to new or emerging technological requirements and changes in customer and/or regulatory requirements. They may also be able to devote greater resources to the promotion and sale of their products and services. As the technological sophistication of its competitors and the size of the market increase, competing producers could emerge and grow stronger. If it fails to compete successfully, it may lose market share in its existing markets, which could have an adverse effect on its business, results of operations, cash flows and financial condition.

Outlook

Ellenbarrie Industrial Gases is an Indian company specialising in the production and supply of industrial, medical, and speciality gases. The company provides essential gases such as oxygen, carbon dioxide, acetylene, nitrogen, helium, hydrogen, argon, and nitrous oxide. The company operates eight facilities across India: four in West Bengal, two in Andhra Pradesh, one in Telangana, and one in Chhattisgarh. On the concern side, five of its nine facilities are located in West Bengal and any adverse developments in the region could impact its manufacturing operations, and consequently, business, results of operations, cash flows and financial condition. Moreover, the business is capital intensive, requiring significant working capital and capital expenditure, which may necessitate incurring indebtedness which may adversely affect its cash flows and profitability.

The issue has been offering 2,18,39,445 shares in a price band of Rs 380-400 per equity share. The aggregate size of the offer is around Rs 829.90 crore to Rs 873.58 crore based on lower and upper price band respectively. Minimum application is to be made for 37 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 15.96% to Rs 3,124.83 million in Fiscal 2025 from Rs 2,694.75 million in Fiscal 2024, primarily due to increases in the sale of manufactured products and revenue from construction contracts. The company’s profit for the year increased by 83.91% to Rs 832.89 million in Fiscal 2025 from Rs 452.89 million in Fiscal 2024.

The company has focussed on innovation and updating its offerings to target evolving requirements of its customers, as well as the increasing demand for green energy. It intends to continue expanding the portfolio of industrial and medical gases that it offers, including the purities and supply options. It proposes to research on and develop capabilities for green hydrogen, as well as allied products such as green ammonia. In particular, it intends to focus on speciality gases, and offer a complete range of pure and speciality gases to its existing customers and new customers. It will focus on catering to applications such as space research in higher volumes, building on its existing experience of supply to space research and defense organizations. Similarly, it supplies gases to various railway workshops under long term contracts. It installs its storage tanks to supply the liquid in these workshops to ensure repeat business.