IPO Size: Rs. 853 cr

• Rs. 400 cr Fresh Issue to (i) repay Rs. 210 cr debt and become net-debt free (ii) capex of Rs. 105 cr
• Rs. 453 cr Offer for Sale (OFS) by the promoter (91.7% stake to drop to 77.2%)

Price band: Rs. 380-400 per share

• In Jan 2025, promoter sold shares worth Rs.140 cr at Rs. 427.69 per share to Mukul Agrawal and 2 domestic funds, which is 7% higher than IPO price.
• On 20Jun25, promoter did another secondary, worth Rs. 250 cr, at upper price band of Rs. 400 per share, to Motilal Oswal MF, while Motilal Oswal is the lead banker.

M cap: Rs. 5,637 cr, implying 15% dilution

IPO Date: Tue 24^th Jun to Thu 26^th Jun 2025, Listing Tue 1^st Jul 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Kolkata-based Industrial Gas Maker

Ellenbarrie Industrial Gases is a 52 year old manufacturer of oxygen, nitrogen, argon, hydrogen helium, carbon dioxide, fire-fighting gas etc. having 9 plants in East and South India. FY25 revenue of Rs. 312 cr was generated mainly from sale of nitrogen (47%), oxygen (40%) and argon (8%). These gases are supplied to manufacturing-heavy sectors such as steel (37% of revenue), pharma and chemicals (26%), healthcare (9%), auto and defence (5%) among others.

50% Capacity Increase Planned

In the past 2 fiscals, company has doubled installed capacity from 600 tons per day (TPD) in FY23 to 1,250 TPD in FY25, with the air separation units’ capacity being fully utilized. Installed capacity has risen to 1,370 TPD at present, and to cater to growing industry demand, expected to rise at 7% CAGR till CY28E, capacity is being further ramped up by 53% to 2,100 TPD, likely by Dec 2025.

This expansion includes a 220 TPD plant in West Bengal, at a capex of Rs. 188 cr, of which, Rs. 58 cr has already been incurred and balance through fresh issue. Balance capacity addition will be funded via a mix of debt and internal accruals.

High Margin Business

Revenue rose 16% YoY to Rs. 312 cr in FY25, with EBITDA up 78% YoY to Rs. 110 cr, translating into 35% EBITDA margin. Margin strengthened from 23% in FY24, due to higher capacity, operating leverage, better produce mix (higher on-site revenue of 15%, against 4% in FY24). Company believes there is scope to increase margins further, as larger unlisted peer Inox Air Products operates at 50% EBITDA margin, although on a Rs. 2,500 cr topline.

Ellenbarrie’s upcoming capacities will have higher production capacity for argon gas, which is used for welding in steel, auto, defence, railway industries, garners higher margin vis-à-vis nitrogen and oxygen.

FY25 PAT stood at Rs. 83 cr, translating into 24% net margin on total income of Rs. 348 cr. On small equity of Rs. 26.2 cr (face value Rs. 2 each), FY25 EPS stood at Rs. 6.4 with RoE of 18% on net worth of Rs. 493 cr.

Attractively Pricing

M cap of Rs. 5,637 cr and enterprise value of Rs. 5,600 cr implies an EBITDA multiple of 51x and a PE of 63x, on FY25 basis. While this appears high for Rs. 300 cr topline as also on an absolute basis, it is attractive for 24% net margin, 18% RoE, high growth visibility besides being lower than sole listed peer Linde India.

MNC giant Linde, with FY25 EBITDA of Rs. 765 cr (31% EBITDA margin), Rs. 450 cr PAT (18% net margin) and 12% RoE, has m cap of Rs. 58,500 cr and is trading at a 76x EBITDA multiple and 130x PE That is, for 1/5^th PAT of Linde, Ellenbarrie’s valuation is 1/10^th, making IPO pricing attractive.

Besides, industry enjoys high entry barriers due to capital intensive nature, strict regulations and technological expertise.