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Ellenbarrie Industrial Gases IPO Details: Launch Date, Share Price, Size & Review

Ellenbarrie-Industrial-Gases-IPO-Details-Launch-Date-Share-Price-Size-&-Review

Business Profile of the Ellenbarrie Industrial Gases Limited

Ellenbarrie Industrial Gases with a rich legacy of over 50 years is the largest 100% Indian-owned industrial gases company in terms of installed manufacturing capacity as of FY24. The company manufactures and supplies industrial gases such as oxygen, nitrogen, hydrogen, etc. The company is one of the largest manufacturers of industrial gases in East India and South India, and the market leader in West Bengal, Andhra Pradesh, and Telangana.

They offer turnkey solutions for medical gas pipeline systems and provide products and medical equipment to healthcare facilities. The company is present across multiple modalities of supply, including onsite, bulk, and packaged, and has a robust distribution network. The company's portfolio of industrial and medical gases serves critical functions across industries for public and private entities, including steel, pharmaceuticals, chemicals, healthcare, aviation, aerospace, etc.

In Fiscal 2024, the company sold its products to 1,836 customers, with long-standing relationships with top five and 10 customers. The company's revenue from operations from customers with whom they had a relationship of over 10 years was 43.60% in FY24.

Ellenbarrie Industrial Gases Limited IPO Objective

As per the draft red hearing prospects, the IPO issue consists only of offer for sale.

  • The OFS consists of up to 14,427,620 Equity Shares aggregating up to Rs. XXXX million. Nothing from those proceeds of OFS will be allotted to company.
  • Ellenbarrie Industrial Gases IPO offer only has fresh issue of Rs. 4, 000 million. As per filings document, the company aims to utilize IPO proceedings towards repayment of certain outstanding borrowing and for setting up an air separation unit at Uluberia-II plant.
Particulars Estimated Amount
Payment of certain outstanding borrowings availed by Company 1768.98
Setting up of an air separation unit at Uluberia-II plant 1300
General corporate purposes XXXX
Total XXXX

(₹ million)

IPO Details of Ellenbarrie Industrial Gases Limited:

IPO Open Date N.A.
IPO Close Date N.A.
Basis of Allotment N.A.
Listing Date N.A.
Face Value ₹2 per share
Price N.A.
Lot Size N.A.
Total Issue Size XXXX Equity Shares
Aggregating up to ₹ XXXX million
Fresh Issue XXXX Equity Shares
Aggregating up to ₹ 4,000 million
Offer For Sale Up to 14,427,620 Equity Shares
Aggregating up to ₹ XXXX million
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered Not more than 50% of the Net Issue
Retail Shares Offered Not less than 35% of the Net Issue
NII (HNI) Shares Offered Not less than 15% of the Net Issue

 

Issue Price & Size: Ellenbarrie Industrial Gases Limited IPO

The issue price of Ellenbarrie Industrial Gases Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 400 crores as well as offer for sale of Up to 14,427,620 Equity Shares.

Launch Date of Ellenbarrie Industrial Gases Limited IPO

The IPO opening date of Ellenbarrie Industrial Gases hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.

Ellenbarrie Industrial Gases Limited Financial Statements

Particulars FY24 FY23 FY22
INCOME
Revenue from operations 2694.75 2051.07 2445.76
Other income 207.28 186.03 113.27
Total Income 2902.03 2237.1 2559.03
EXPENSES
Cost of materials consumed 38.28 41.14 36.56
Purchase of stock-in-trade 533.77 222.23 343.84
Changes in inventories of finished

goods & stock-in-trade

-23.18 -4.58 -32.34
Power expenses 776.62 739.73 637.4
Employee benefits expense 160.56 144.05 130.01
Finance costs 80.27 35.48 45.28
Depreciation and amortization expense 100.13 113.79 115.28
Other expenses 593.4 572.62 525.7
Total expenses 2259.85 1864.46 1801.73
Profit before Tax 642.18 372.64 849.09
Profit for the year 452.89 281.42 671.55

 

Particulars Ellenbarrie Industrial Gases Limited Linde India Limited
FY24 FY23 FY24 FY23
Revenue from Operations 2694.75 2051.07 27686.69 31355.2
Revenue from Operations Growth (%) 31.38 -16.14 -11.7 48.47
Profit for the year 452.89 281.42 4340.86 5380.59
Net Cash Generated from Operating

activities (in ₹ millions)

437.47 387.47 4369.55 6281.84
EBITDA (in ₹ millions) 615.3 335.88 7023.23 7648.37
EBITDA Margin (%) 22.83% 16.38% 25.37% 24.39%
PAT Margin (%) 15.61% 12.58% 15.25% 16.61%
RoE (%) 11.05% 7.75% 12.52% 17.14%
RoCE (%) 12.22% 6.46% 20.15% 26.27%
Net Debt to Equity Ratio (in times) 0.03 -0.05 -0.28 -0.38
Gross Fixed Asset Turnover Ratio (in times) 0.59 0.68 0.86 1.06
Number of Facilities Operated 8 6 39 35
Number of Facilities under Construction

or Implementation

2 1 N.A N.A
Total Operational Capacity (Tons per day) 3691 591 N.A N.A
Capacity under Construction (Tons per day 390 600 N.A N.A
Number of Bulk Customer Installations 197 176 N.A N.A

 

Ellenbarrie Industrial Gases Limited Promoters & Shareholding

As of date, there are two promoters of the company.

The promoter in aggregate collectively holds 89.45% of the paid-up share capital of company.

Name of the Shareholder No. of Eq. Shares as on the date of this DRHP % of total pre-Offer paid up equity capital Max. No. of Eq. Shares offered in the OFS
Promoters
Padam Kumar Agarwala 8,34,21,440 63.71% 72,13,810
Varun Agarwal 3,37,05,560 25.74% 72,13,810
Promoter Group
Shanti Prasad Agarwala 1,24,38,880 9.50% -
Manisha Saraf 10,000 0.01% -
Padam Kumar Agarwala Family Private Trust 1,000 Negligible -
Varun Agarwal Family Private Trust 1,000 Negligible -

 

Should You Subscribe to Ellenbarrie Industrial Gases Limited IPO or Not

While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.

Competitive Strengths of Swiggy Limited:

Leading Manufacturer of Industrial Gases

The company, established in 1973, is the largest Indian-owned industrial gases company in terms of installed manufacturing capacity and revenues as of FY24. It is a market leader in East India and South India, and the largest manufacturer in West Bengal, Andhra Pradesh, and Telangana. The company's growth is attributed to its ability to compete in an infrastructure-intensive industry and its ability to identify, manufacture, and deliver diverse industrial gases.

Comprehensive Product Portfolio

The company manufactures a variety of industrial gases, including O2, N2, argon, helium, hydrogen, CO2, N2O, and acetylene. They cater to specific requirements in industries such as steel, pharmaceuticals, healthcare, aviation, aerospace, petrochemicals, food and beverages, etc.

They also offer niche products like synthetic air, ultra-high purity nitrogen gas, ultra-high oxygen gas, and liquefied argon gas. They also offer turnkey solutions for medical gas pipeline systems and medical equipment.

Industry FY24 FY23 FY22
Revenue from sale of gases, related

products and services

83.93% 92.28% 88.35%
Revenue from project engineering services 16.07% 7.72% 11.65%

 

Long-standing Customer Relationship

Customers are highly selective in selecting new suppliers of gasses because Transitioning to new suppliers is cumbersome both financials and operationally. Thus, the industrial gases industry is characterized by high customer stickiness, particularly for large customers. For package customers, gases such as oxygen and nitrogen are compressed under high pressure into cylinders and transported to them. However, the seamlessness of the supply chain, controlled transportation conditions, familiarity with suppliers, and safety and quality control concerns limit the extent to which customers are willing to switch suppliers of industrial gas. As of March 31, 2024, the company had 1,526 package customers.

As of FY24, the company had 295 bulk customers with an average contractual tenure of five years.

As can be seen from data in table below, the company generates maximum of its revenue from bulk customers. Company’s majority of revenue generation comes from clients that have relationship of more than 5 years.

Industry FY24 FY23 FY22
% of Rev from Sale of Gases, Related Products and Services
Revenue from bulk customers 75.41% 75.03% 77.73%
Revenue from package customers 20.20% 22.26% 19.90%
Revenue from onsite customers 4.39% 2.71% 2.38%
Period of Customer Relationship Percentage of Revenue from Operations (%)
More than 10 years 43.60% 43.16% 32.60%
More than 5 years but less than 10 years 16.48% 23.10% 19.93%
Up to five years 39.92% 33.74% 47.47%

 

Expansive Operational and Distribution Capabilities

Gas industry is capital intensive industry which also requires specific know how of not only exptractiog but suuppliying those gasses safely.  As of FY24, the company is one of the largest manufacturers of industrial gases in East India and South India, with eight facilities across East, South, and Central India. The company operates one of the largest oxygen plants in India, with a capacity of 1,250 TPD.

The company was the first to set up a hydrogen electrolyser in Eastern India and has built efficient distribution networks. They offer products using different supply options based on customer requirements and have a robust distribution network with the third highest number of transport tankers, cylinders, and customer installations in India.

The company also has an in-house projects team of 38 employees, which sets up its facilities using material supplied by original equipment manufacturers. This team enables the company to build deep relationships with customers, customize solutions, and create a knowledge base in-house.

Future strategy

The company plans to expand its portfolio of gases, particularly speciality gases, to cater to new end-use industries and green energy demand. They aim to develop R&D capabilities for green hydrogen and green ammonia, offering a complete range of pure and speciality gases to existing and new customers. They will also focus on providing ultra-high purity and electronic gases and chemicals for electronics and semiconductors, and establishing supply chains and distribution capabilities for these gases. They plan to initiate plant manufacturing operations, leveraging their existing project engineering experience and vendor network.

The company plans to expand its manufacturing capacity and establish a pan-India presence by establishing two expansion projects. The company also plans to expand through a liquid ASU and cylinder filing station in North India and West Bengal.

Risk Factors of Ellenbarrie Industrial Gases Limited:

Client concentration

The company sources its revenue from the sale of gases and project engineering services. The product engineering services includes design, engineering, supply, installation, and commissioning of tonnage air supply units and related projects.

A decrease in business from key customers, due to adverse market conditions or the economic environment, may adversely affect the company's fundamentals, its operations, and companies financial. All top 10 customers are located in East and South India, and due to slowing economy or political developments in these regions may lead to a reduction in the volume of products they source from the company.

Customer concentration within sale of gases FY24 FY23 FY22
% of Revenue from Sale of gases, related products and services
Top 1 10.84% 8.35% 6.55%
Top 5 29.59% 26.26% 19.92%
Top 10 40.95% 37.56% 31.71%

 

Unscheduled disruptions in the manufacturing process

As of FY24, the company operates eight facilities across India, including three bulk manufacturing plants, two standalone cylinder filling stations, one onsite facility in Kharagpur, West Bengal, one onsite facility in Nagarnar, Chhattisgarh, and one onsite facility in Kurnool, Andhra Pradesh.

The company is also pursuing two expansion projects, including a new plant in Uluberia, West Bengal, and capacity expansion at existing premises in Kharagpur, West Bengal. The company's business relies on efficient management of its facilities and any unscheduled disruptions in the facility, such as industrial accidents, fire, mechanical failure could affect the company's ability to operate its facilities.

Disruptions to onsite operations

The company has a long operating history in industrial gas supply but only began onsite operations in 2019. As of FY24, three facilities are located at the sites of customers, including a major steel manufacturing company in India, Jairaj Ispat Limited, and a government-owned steel manufacturing company. The products manufactured at these facilities are supplied exclusively to these customers at prices outlined in the contracts.

Any unexpected challenge including decoration in relationship with clients leading to non-renewal of agreements may require the company to cease operations, inability at company level to supply required amount of gases may lead to loss of revenue and financial loss. Additional exposes like monthly charge for leasing equipment on the customer's premises.

Customer concentration within sale of gases FY24 FY23 FY22
Percentage of Revenue from operations
Customer 1 1.94% 2.50% 2.10%
Customer 2 0.28% Nil Nil
Customer 3 1.45% Nil Nil

 

Contracts through bidding process

The company supplies its products to government entities and PSU’s through competitive bidding processes and pre-qualification criteria. However, if the company fails to offer competitive quotations, it may not be selected for future contracts. Tender processes may be challenged even after contracts have been awarded due to extensive internal processes, policy changes, and insufficient funds, leading to increased time gaps between invitation for bids and award of contracts.

Particular FY24 FY23 FY22
Number of contracts obtained through

government/PSU tenders

65 71 85
Revenue from contracts obtained through

government/PSU tenders (₹ million)

364.96 519.3 555.9
Revenue from contracts obtained through government

/PSU tenders, as a % of revenue from operations

20.97% 25.32% 22.73%

 

Supplies to industry

The company supplies gases for industrial use in various industries, including pharmaceuticals, steel, healthcare, aerospace, space, defense, etc. The demand for these products is directly affected by factors affecting these industries. The factors that could lead to volatility in demand by industrial units could be increased competition, seasonality of demand, market share loss, macro-economic conditions, overall slowdown in economy, etc.

Industry FY24 FY23 FY22
% of Rev from Sale of Gases, Related Products and Services
Pharmaceuticals and chemicals 29.44% 31.03% 20.96%
Steel 28.52% 21.73% 14.33%
Dealer and retail network 11.44% 17.33% 30.93%
Healthcare 8.06% 8.21% 11.83%
Railway, aviation, aerospace & space 5.81% 6.85% 6.78%
Defence 4.28% 4.20% 3.10%
Engineering and infrastructure 4.13% 4.12% 5.19%
Petrochemicals including oil & gas 3.20% 2.71% 1.23%
Others 5.12% 3.82% 5.65%

 

Standards and quality checks

Every gas has its natural property and if wrong gases are reacted with each other, they can give uneven results. Their products and manufacturing processes are subject to stringent quality standards and specifications. Failure to maintain these standards could result in additional costs, legal liabilities and adverse impact on business fundamentals. Along with maintaining standards, they are required to test their products and provide relevant certifications of quality.

Capacity utilization

As of FY24, Ellenbarrie Industrial Gases operate eight facilities with capacity utilization affecting its operating results. High-capacity utilization allows us to spread fixed costs, resulting in higher gross profit margin. Our product mix, demand and supply balance, and average selling prices also affect capacity utilization. Industry/market conditions, customer requirements, and procurement practices also affect capacity utilization. Inefficiencies can lead to under-utilization of manufacturing capacities. Changes in customer demand can reduce our ability to accurately estimate future requirements, making it difficult to schedule production and potentially affecting our business, results, cash flows, and financial condition.

Particulars FY22 FY23 FY24
Capacity Utilisation (%)
Uluberia, West Bengal
ASU plant 93.82% 98.14% 100.31%
Hydrogen electrolyzer 9.73% 32.18% 38.34%
Parawada (Visakhapatnam), Andhra Pradesh
ASU plant 88.89% 91.83% 92.19%
Hyderabad (Jadcherla), Telangana
ASU plant 10.16% 94.23% 108.50%
Kharagpur, West Bengal
ASU VSPA plant 101.43% 95.45% 98.81%
ASU onsite plant 93.44% 89.89% 89.82%
Nagarnar, Chhattisgarh - Since November 1, 2023
ASU Plant N.A N.A. 47.75%

 

Facility concentration

As of FY24, four of their eight facilities are in West Bengal, with a new plant being set up and capacity expanding at an existing facility. These strategic locations in East India expose them to regional adversities, potentially requiring significant capital expenditure and changing business strategies.

Product concentration to revenue

The business relies heavily on the sale of oxygen and nitrogen and these two products contribute significant position of its revenue in 2023-24. However, the sale of these gases may decline due to factors such as seasonal demand, market share loss, economic conditions, and other government policies. A significant decline in oxygen or nitrogen usage could negatively impact the business, results of operations, cash flows, and financial condition.

Gas FY24 FY23 FY22
% of Revenue from Sale of gases, related products and services
Revenue from sale of oxygen 48% 48.36% 58.29%
Revenue from sale of nitrogen 37.32% 37.71% 28.70%
Total rev. from sale of oxygen and nitrogen 85.32% 86.07% 86.99%

 

Ellenbarrie Industrial Gases Limited Grey Market premium

Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable

However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share

According to various online sources, the Grey Market Premium or GMP of the Ellenbarrie Industrial Gases Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.

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