Ellenbarrie Industrial Gases Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Ellenbarrie Industrial Gases Limited reported a strong Q1 FY26 with 24% YoY revenue growth and 40% YoY EBITDA growth, driven by improved capacity utilization and product mix. EBITDA margins expanded to 37%. The company utilized IPO proceeds to repay INR 210 crores of debt and outlined aggressive capacity expansion plans, targeting 25% revenue growth and sustained 37% EBITDA margins for the next 2-3 years. Strategic acquisitions and geographical expansion are also underway.

Highlights

  • Revenue grew 24% YoY in Q1 FY26, driven by ramp-up of new facilities.

  • EBITDA grew almost 40% YoY, with EBITDA margins improving to 37% from 30% YoY.

  • Argon revenue share increased to 9% (from 7% a year ago), contributing to margin expansion.

  • Successfully repaid INR 210 crores of borrowings in the first week of July using IPO proceeds, strengthening the balance sheet.

  • New merchant plant in East India expected to commence operations in October 2025, and an on-site plant in March 2026.

Concerns

  • Merchant plants typically require an 18-24 month ramp-up period to reach full capacity utilization.

  • Power expense volatility observed in FY23 (36% of revenue), though management attributes it to a one-off event and improved efficiency of new plants.

Key financials

  1. Revenue Growth 0.24 yoy_pct
  2. EBITDA Growth 0.4 yoy_pct
  3. EBITDA Margin 37%

What they filed

Q1 FY27: revenue up 17.9%, net profit up 84.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue95 68 82 84 89 −6%81 +19%87 +6%99 +18%
EBITDA36 27 25 31 33 −8%25 −7%27 +8%38 +23%
Net profit30 19 18 19 37 +23%26 +37%23 +28%35 +84%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹250 Cr
    • Building additional capacities in merchant and on-site ASU gases
    • 220 TPD capacity ₹160 Cr
    Coming to the capital work in progress, as of now we have a position of about INR52 crores, and we are committed to spend around INR250 crores over the next 1.5 years.
  • Debt Debt disclosed
    • Repayment Repaid borrowings in the first week of July, mostly long-term borrowings, using IPO proceeds. ₹210 Cr
    We have already spent, the company has already repaid about INR210 crores borrowings in the first week of July, most of it being long-term borrowings. So with a strong unlevered balance sheet, the road is open for taking up new capital expenditures and new capacity creation.
  • M&A Cylinder filling assets in Bangalore Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Provides value addition, penetration into Bangalore market, caters to cylinder gas customers and medical customers, helps load Kurnool facility.

    Small acquisition, but strategic for Bangalore market penetration and value addition for Kurnool plant.

    We are looking at inorganic growth in synergistic areas, acquisition of our cylinder filling assets in Bangalore is a move in that direction. This shall provide value addition to available products from Kurnool. ... Yes, so this acquisition actually is, of course, it's quite a small acquisition, but in terms of and it's, the outlay is only about Rs. 5.5 crores.
  • Liquidity Liquidity disclosed Company has a cash surplus on its balance sheet, enabling significant capex.
    I think we'll continue to grow at those sort of numbers with some upside. You know, so and of course, you know, the fact that we have now a cash surplus on our balance sheet, you know, enables us to put up significant amount of capex to really charge up our growth.

Guidance & targets

Revenue

  • Revenue Growth Revenue · next 2-3 financial years · High confidence at least 25%
    Now, if we sort of put this all together, I would say that, in terms of revenue growth, the kind of revenue growth that we shared Q1 to Q1, which was about 25%, we definitely expect at least this level of revenue growth to continue. As we keep adding more capacity, the revenue growth will sort of keep coming through. So, we definitely think that for the next two to three financial years, there's a strong growth runway for us.

    — Varun Agarwal

Profitability

  • EBITDA Margin Profitability · future · High confidence at least maintain 37% with potential upside
    I think our margins were about 37% in terms of EBITDA. We don't expect these margins to go down. In fact, as we sort of build up more capacities, have higher argon production, more onsite plants, we would expect to at least maintain these margins with a sort of potential upside to these EBITDA margin numbers.

    — Varun Agarwal

Capacity

  • Total Owned & Operated Capacity Capacity · end of FY26 · High confidence 1,910 tons per day

    From 1,370 tons per day today

    So, that will take our capacity as on end of FY26 from 1,370 tons per day to 1,910 tons per day.

    — Varun Agarwal

  • Total Owned & Operated Capacity Capacity · FY27 · High confidence 2,130 tons per day
    And basis the project that we are currently constructing and sort of planning. FY27 capacity would be 2,130 tons per day.

    — Varun Agarwal

Product Mix

  • Argon Revenue Share Product Mix · future · Medium confidence about 15%

    From 9-10% today

    So, I think we would look at an Argon revenue of somewhere in the region of about 15 odd percent. That's 15% plus, you know, when all this capacity sort of kicks in.

    — Varun Agarwal

Project Commissioning

  • Merchant Plant (East India) Project Commissioning · October 2025 · High confidence commence operation
    Additionally, we expect a merchant plant in East India to commence operation in October 2025 and another on-site plant, Forest Steel Mill, in March 2026.

    — Padam K. Agarwala

  • On-site Plant (Forest Steel Mill) Project Commissioning · March 2026 · High confidence commence operation

    — Padam K. Agarwala

  • Merchant Plant (North India) Project Commissioning · end of Q1 next financial year · High confidence up and running
    And then we have a merchant plant in North India, which will be up and running in end of Q1 of next financial year.

    — Varun Agarwal

What to watch in Q2 FY26

Kurnool Plant Capacity Utilization

H2 FY26
Current 60-65% in Q1 FY26
Target 85-90%

Why it matters

Increased utilization of the Kurnool plant is a key driver for revenue growth and margin improvement.

The Kurnool plant, ramp-up is happening currently as on Q1, it was about 60% to 65%. Q2 capacity utilization will be significantly higher than Q1. And we would expect this plant to reach sort of the optimum capacity utilization of about 85%, 90%, maybe sort of in the second half of this year.

Risks & concerns

  • Ramp-up period for new merchant plants

    medium

    Merchant plants typically require an 18-24 month ramp-up period to reach optimum utilization, which could delay full revenue realization.

    Management acknowledged

  • Competition from large MNCs

    medium

    The company operates in a market with large MNCs like Linde and Inox (each with ~25% market share), but management believes in co-existence and competes on service and customer connect.

    Analyst acknowledged

  • Power cost volatility

    low

    A spike in power expenses was observed in FY23 (36% of revenue), but management attributes it to a one-off event and notes new plants are more efficient.

    Analyst acknowledged

Q&A highlights

7 direct
Project updates and utilization for Kurnool and new facilities Direct
The Kurnool plant, ramp-up is happening currently as on Q1, it was about 60% to 65%. Q2 capacity utilization will be significantly higher than Q1. And we would expect this plant to reach sort of the optimum capacity utilization of about 85%, 90%, maybe sort of in the second half of this year.

Provides specific utilization figures and ramp-up timelines for key facilities, impacting future revenue.

Asked by Dayanand Mittal

Discrepancy in reported capacity figures (DRHP vs. current) Direct
So, Parikshit, there is just one difference between the two numbers. There is a 2,500 tons per day plant which is being operated by us, which is coming in that larger figure. Whereas the figure that I am mentioning, the 1370 figure, those are plants which are owned and operated by us.

Clarifies the difference between owned and operated capacity, which is crucial for understanding the company's asset base and revenue generation potential.

Asked by Parikshit Kabra

Pan-India expansion strategy and rationale Direct
No, you are right. I think there is a benefit of having multiple plants in a cluster and that is what we have been doing. So, while we are looking at becoming a pan India player, at the same time, it is not that we are ignoring the geographies that we are already strong in. Now, there are a couple of reasons to ultimately want to become a pan India player because, for example, the Western part of the country is where a lot of industrial growth is happening.

Explains the strategic rationale behind geographical expansion, particularly into Western India, and the benefits of a cluster approach.

Asked by Parikshit Kabra

Growth and margin targets for the next 3-4 years Direct
I think our margins were about 37% in terms of EBITDA. We don't expect these margins to go down. In fact, as we sort of build up more capacities, have higher argon production, more onsite plants, we would expect to at least maintain these margins with a sort of potential upside to these EBITDA margin numbers. ... I think we are fairly confident of maintaining at least this growth [25% YoY], if not higher, over the next at least two to three years.

Provides clear forward-looking guidance on revenue growth and EBITDA margins, which are key performance indicators for investors.

Asked by Gautam Rajesh

Volatility in power expenses in FY23 Partial
Yes, you're right. I mean, as you know, power is our basic raw material for us, for our industry. And 23-24, there must have been some tariff increase, especially in the South, which does typically increase the power cost, but at the same time, we try to, over a long period, we try to optimize that to purchase off from the exchange, power from the exchange which normally comes at a discount. ... One major factor was 21-22 was a COVID-affected year when the revenue was much higher than the going level of prices. So, that's why, I mean, it's a misnomer to look at power cost as a percentage of revenue.

Addresses a past concern regarding cost volatility, providing context and indicating that new, more efficient plants will mitigate future risks.

Asked by Suvaan Mittal

Argon revenue contribution and its impact on margins Direct
So, I think we would look at an Argon revenue of somewhere in the region of about 15 odd percent. That's 15% plus, you know, when all this capacity sort of kicks in. And, of course, you know, having a 15% plus contribution from Argon would obviously also feed into the EBITDA margins to some extent. ... But in terms of realization, argon is, you know, three to four x, at least or maybe even higher than oxygen and nitrogen. So therefore, the margin on argon is significantly higher. I would say, you know, one and a half to two times the margin of the blended EBITDA margin of the company.

Highlights the strategic importance of Argon for future margin expansion and provides a quantitative estimate of its higher profitability.

Asked by Dayanand Mittal

Market share and key competitors Direct
So, we have a market share currently of, I would say, about 4 odd percent. So, very, very small market share, which means that there is a lot of room for us to grow. Our key competitors would be large MNC companies, such as Linde, who is sort of the listed peer and the largest competitor, and also Inox Air Products. ... The first one is Linde India. So, Linde and Inox would each be at, I mean, somewhere close to about 25% each.

Provides context on the company's current market position and the competitive landscape, indicating significant room for growth.

Asked by Gautam Rajesh

Unit economics of capacity (revenue vs. capex) Direct
So let me give you a live example where we are putting up a 220 tons per day capacity. That 220 tons per day capacity is costing us about INR160 crores. Right. And that has a revenue potential of somewhere in the region of INR100 crores to INR120 crores. ... Onsite capacity, typically, the revenues will be very limited. For example, a 300 tons plant, which we are setting up now, the onsite plant has a revenue potential of only about INR25 crores a year, because all the costs are borne by the onsite customer.

Offers specific financial details on the investment required for new capacity and the expected revenue generation, differentiating between merchant and on-site models.

Asked by Raman KV

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Highlights

Ellenbarrie Industrial Gases Limited reported a strong Q1 FY26, achieving a 24% year-on-year growth in revenue. EBITDA also saw significant growth of almost 40% year-on-year. The company's EBITDA margins improved to 37% in Q1 FY26, up from 30% in the same period last year, primarily driven by in-house Argon production and contributions from new on-site businesses.

Capacity Expansion and Project Timelines

The company's owned and operated capacity is projected to increase from 1,370 tons per day (TPD) to 1,910 TPD by the end of FY26, and further to 2,130 TPD by FY27. Key projects include a merchant plant in East India expected to commence operations in October 2025, and an on-site plant (Forest Steel Mill) scheduled for March 2026. Another merchant plant in North India is planned for end of Q1 next financial year.

Strategic Growth and Pan-India Ambition

Ellenbarrie is focused on geographical expansion, aiming to become a Pan-India company. A recent acquisition of cylinder filling assets in Bangalore for INR 5.5 crores is a strategic move to penetrate the Bangalore market, provide value addition, and cater to medical customers. The company is also actively exploring opportunities in Western India, leveraging its strengthened balance sheet post-IPO.

Margin Drivers and Outlook

EBITDA margin expansion is attributed to increased in-house Argon production, which has a significantly higher value addition and contributes 1.5 to 2 times the blended EBITDA margin. Argon's revenue share has increased from 7% to 9% and is targeted to reach 15%. New capacities are also more efficient in power consumption, which is expected to gradually reduce power costs as a percentage of revenue.

Capital Allocation and Debt Repayment

The company has committed INR 250 crores for capital work in progress over the next 1.5 years. Following its IPO, Ellenbarrie utilized INR 210 crores of the proceeds to repay borrowings, primarily long-term debt, resulting in a strong unlevered balance sheet. This financial strength provides the foundation for further capital expenditures and capacity creation.

Market Share and Competitive Landscape

Ellenbarrie currently holds a market share of about 4% in the industrial gases sector, indicating significant room for growth. Key competitors include large MNCs like Linde India and Inox Air Products, each holding approximately 25% market share. Management emphasizes competition through service and customer connect, believing in co-existence rather than direct price wars.

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