India’s oldest industrial gases player gears up for its next growth phase
Motilal Oswal Financial Services (MOFSL) has initiated coverage on Ellenbarrie Industrial Gases (ELLEN) with a BUY rating, setting a base target price (TP) of INR 680. But what has caught investors’ attention is the bull case scenario, where the brokerage projects the stock could touch INR 836, implying a 52% upside from current levels.
The optimism is not without reason. ELLEN, one of India’s oldest industrial gas producers, is transitioning from being a regional legacy player into a national-scale, diversified gas supplier riding structural demand growth across steel, pharma, chemicals, and electronics.
Industry Context: Global Waves, India’s Tailwinds
The global industrial gases market stood at USD 603 billion in CY19 and is projected to expand to USD 775 billion by CY28, clocking a steady 5.5% CAGR. Asia-Pacific (APAC) is leading this growth, with its share climbing from 37% to 44%, underscoring the region’s industrialization momentum.
India’s story is even stronger. The domestic industrial gas market, valued at USD 1.31 billion in CY24, is set to grow at 7.5% CAGR, reaching USD 1.75 billion by CY28. Demand is underpinned by multiple high-growth sectors:
- Steel: ~23% share of demand (CY24)
- Pharmaceuticals: ~19%
- Chemicals: ~5%
- Emerging Electronics: gaining ground with PLI-backed manufacturing expansion
This sets the perfect backdrop for ELLEN’s aggressive expansion.
Company Profile & Legacy
Founded over five decades ago, ELLEN has evolved into a comprehensive gases company with a wide product basket that includes oxygen, nitrogen, argon, hydrogen, helium, carbon dioxide, and specialty gases.
Its revenue model is well-balanced:
- Bulk gases: 67% share
- Packaged cylinders: 18%
- Onsite plants: 15%, backed by long-term 15–20 year contracts with steel majors like Tata Steel and Jairaj Ispat
This diversification ensures visibility, predictable cash flows, and reduced volatility.
Strategic Growth Drivers
- Steel Sector Play: Ellenbarrie Industrial Gases’s co-location strategy places its plants directly at customer sites (Kharagpur and Kurnool), ensuring steady volumes, lower logistics costs, and strong stickiness with anchor clients.
- Pharma Park Advantage: The Vizag facility is inside a pharmaceutical manufacturing hub, giving ELLEN a captive and growing client base amid rising healthcare and export demand.
- Electronics Manufacturing Opportunity: High-purity gases like nitrogen, argon, and hydrogen are critical for electronics. With Apple, Samsung, and Foxconn ramping up local production under India’s PLI scheme, ELLEN is well-positioned to capture incremental demand without heavy upfront investments.
- Argon Ramp-Up: Argon, a high-margin specialty gas, contributed ~7% of revenue in FY23. This is expected to rise to 15% at full capacity utilization, significantly boosting profitability.
Operations & Technical Edge
Ellenbarrie Industrial Gases’ strength lies in its cryogenic Air Separation Unit (ASU) process, which separates atmospheric gases through multi-stage cooling and distillation. Unlike peers that rely heavily on consultants, ELLEN leverages an in-house engineering team of 33 experts, enabling:
- Faster and cheaper plant execution
- Lower dependency on third parties
- Additional service revenue from external contracts
Its multi-vendor procurement strategy for critical equipment like compressors and turbines further ensures competitive costs and timely deliveries.
Ellenbarrie Industrial Gases: Financial Outlook
📊 Key Financials
| Particulars | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Revenue | 312.5 | 495.1 | 703.4 | 841.5 |
| YoY Growth (%) | 16.0 | 58.4 | 42.1 | 19.6 |
| EBITDA | 109.7 | 193.9 | 295.7 | 359.7 |
| EBITDA Margin (%) | 35.1 | 39.2 | 42.0 | 42.7 |
| PAT | 83.3 | 147.4 | 239.8 | 293.4 |
| EPS (INR) | 5.9 | 10.5 | 17.0 | 20.8 |
| Net Debt | 240 | 80 | 10 | (20) |
| RoE (%) | 18.4 | 19.2 | 20.7 | 20.6 |
| RoCE (%) | 14.0 | 16.4 | 19.6 | 20.1 |
The story is clear: robust growth, expanding margins, and balance sheet deleveraging. IPO proceeds have already reduced long-term borrowings by ~INR 210 cr, strengthening financial flexibility.
Ellenbarrie Industrial Gases Valuations — Base, Bull, Bear
| Case | Revenue CAGR (FY25–28E) | EBITDA Margin FY28E | EPS CAGR (FY25–28E) | Target P/E (FY27E) | TP (INR) |
|---|---|---|---|---|---|
| Bear Case | 35% | 37.8% | 37% | 30× | 390 |
| Base Case | 39% | 42.0% | 52% | 40× | 680 |
| Bull Case | 45% | 45.0% | 62% | 45× | 836 |
For perspective, Linde India, a global peer, reported negative 2% revenue CAGR over FY23–25, highlighting Ellenbarrie’s relative growth momentum.
SWOT Analysis
- Strengths: Legacy brand, diversified product mix, strong client relationships, in-house execution capabilities.
- Weaknesses: Dependence on a few anchor clients; long-term contracts limit pricing flexibility.
- Opportunities: Specialty gases, electronics boom, pan-India capacity ramp-up, potential M&A.
- Threats: Government tender delays, cyclical demand from steel and pharma, operational disruptions.
Risks to Thesis
Motilal Oswal also cautions investors about downside triggers:
- Heavy reliance on steel and pharma clients.
- Possible operational issues in onsite plants.
- Tendering delays from PSU/government contracts.
- Demand slowdown in key end-user industries.
Ellenbarrie Industrial Gases Post IPO Performance
Ellenbarrie Industrial Gases launched its IPO on June 26, 2025, raising approximately INR 852.53 crore, comprising a fresh issue of INR 400 crore and an offer for sale of INR 452.53 crore. The offering received an overwhelming response from investors, achieving a robust subscription of 22.19 times.
The stock debuted with a strong listing gain of 33.65% over the issue price of INR 400. Post listing, it surged to a high of INR 613, delivering an impressive 53.25% return from the issue price. Currently, the shares are trading around INR 551, reflecting a healthy consolidation of nearly 10% from the peak.
Why Motilal Oswal is Bullish on Ellenbarrie
MOFSL’s optimism is rooted in a combination of factors: a structurally expanding Indian gas market, ELLEN’s co-location strategy with steel majors, pharma park advantage, and margin-accretive argon expansion. Financial momentum has been exceptional, with EBITDA margins rising from 16.4% in FY23 to 35.1% in FY25, and further gains likely.
If the company executes its pan-India expansion smoothly, Ellenbarrie could well emerge as a multi-year compounder. The bull case TP of INR 836 (52% upside) underscores the street’s conviction that the best years may still lie ahead for this industrial gases veteran.
For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.