Ellenbarrie Industrial Gases Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Ellenbarrie Industrial Gases reported a strong Q2 FY26, with sequential revenue growth of 6.7% to ₹892 million and a significant 96% YoY increase in PAT to ₹367 million, driven by operational discipline and capital efficiency. The company maintained a stable EBITDA margin of 38% and saw its high-margin Argon business grow to 13% of revenues. While facing minor project execution delays, Ellenbarrie is actively expanding capacity and pursuing growth in specialty gases for emerging sectors like solar and semiconductors, targeting a 20-25% CAGR in core gases over the next 4-5 years.

Highlights

  • Revenue of ₹892 million, reflecting a 6.7% sequential increase.

  • EBITDA margin maintained at a stable 38% (₹337 million).

  • Profit After Tax (PAT) increased by 96% year-on-year to ₹367 million.

  • Successful ramp-up of operations at Kurnool and Tata Steel Metaliks plants, with Kurnool utilization now at 75-80%.

  • Argon, a high-margin gas, now contributes 13% to total revenues, up from 10% last quarter, with long-term bullish outlook.

  • New capacity additions expected to increase total owned and operated capacity to 1910 TPD by end of FY26 and over 2100 TPD by end of FY27.

Concerns

  • Project engineering revenues are lumpy, causing YoY revenue comparisons to be distorted without adjustment.

  • Small delays in project execution for new plants, pushing some commissioning timelines by a month or a half-year.

  • Short-term fluctuations in Argon prices are possible, although long-term outlook remains bullish and sales are protected by contracts.

Key financials

  1. Revenue 892 Mn +6.7%QoQ
  2. EBITDA 337 Mn
  3. EBITDA Margin 38%
  4. PAT 367 Mn +96%YoY

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

medium confidence
  • Capex Capex disclosed
    • New merchant plant in East India
    • Onsite plant in East India
    • Another merchant plant (FY27)
    • 220 TPD plant commissioning
    Our merchant plant in East India is on track to go live end of this month. We also expect to commission our onsite plant in East India by March 2026 followed by another merchant plant in FY27. These expansions will take our total owned and operated capacity to 1910 tons per day by end of this financial year and over 2100 tons per day by end of next financial year.

Guidance & targets

Revenue Growth (Core Gases)

  • Revenue CAGR Revenue Growth (Core Gases) · next four to five years · High confidence 20 to 25%
    We expect to grow at the CAGR of 20 to 25% over the next four to five years in our core gases segment, considering the last full year financial numbers as a base and all this while maintaining EBITDA margins of around 40%.

    — Padam Kumar Agarwala

Profitability

  • EBITDA Margin Profitability · long term · High confidence around 40%
    all this while maintaining EBITDA margins of around 40%.

    — Padam Kumar Agarwala

Capacity

  • Total Owned and Operated Capacity Capacity · by end of this financial year · High confidence 1910 tons per day
    These expansions will take our total owned and operated capacity to 1910 tons per day by end of this financial year

    — Varun Agarwal

  • Total Owned and Operated Capacity Capacity · by end of next financial year · High confidence over 2100 tons per day
    and over 2100 tons per day by end of next financial year enabling us to serve a more diversified set of industries and geographies.

    — Varun Agarwal

Argon Contribution

  • Argon Revenue Contribution Argon Contribution · long term · Medium confidence inch up

    From 13% today

    Argon was 10%, I think you know we've now reached about 13%. I think long term this number we do expect it to inch up

    — Varun Agarwal

Argon Profitability

  • Argon EBITDA Margin Argon Profitability · long term · Medium confidence higher than 40%
    if the margin EBITDA margin for the company as a whole is 40%., then argon EBITDA margins will definitely be higher than 40%

    — Varun Agarwal

Traded Specialty Gases Profitability

  • Traded Products Margin Traded Specialty Gases Profitability · Medium confidence 15 to 20%
    for traded products... margins would not be as high as a manufactured product, but it would still, you know, probably be in somewhat of 15 to 20% kind of a margin on the traded products thing.

    — Varun Agarwal

220 TPD Plant Revenue Potential

  • Annual Revenue 220 TPD Plant Revenue Potential · annual · High confidence 100 plus crores
    I think the revenue potential of 100 plus crores you know still holds.

    — Varun Agarwal

What to watch in Q3 FY26

East India Merchant Plant Commissioning

next quarter
Current Expected end of November 2025 (delayed by ~1 month)
Target Commercial operations commenced

Why it matters

This new capacity is expected to ramp up quickly and contribute significantly to H2 FY26 revenues, supporting overall growth targets.

Our merchant plant in East India is on track to go live end of this month. So, there's been about a delay of a month or so.

Risks & concerns

  • Project Execution Delays

    medium

    Delays of about a month for East India merchant plant and pushing next merchant plant from Q2 FY27 to H2 FY27. Management views this as a key risk for growing businesses in the sector.

    Management acknowledged

  • Short-term Argon Price Fluctuations

    low

    While long-term demand for Argon is strong and bullish, short-term prices may fluctuate. However, sales are largely protected by long-term contracts, mitigating significant impact.

    Management acknowledged but downplayed

  • Lumpy Project Engineering Revenue

    low

    Project engineering revenue is not consistent quarter-on-quarter, which can distort overall revenue comparisons. Management emphasizes focusing on the core gases business for consistent growth.

    Management acknowledged

Q&A highlights

8 direct
Impact of recent GST changes on industrial gases Direct
While there is no change in the GST on industrial gases, but for products such as medical oxygen, the GST has actually been reduced from 12% to 5%.

Clarifies regulatory impact, showing a positive change for medical oxygen, which is a critical product for the company.

Asked by Ashok Mithinthi

Clarification on revenue guidance (20-25% CAGR) Direct
our guidance of 20 to 25% is purely on the core gases business, any number which was shared earlier, would have been, you know, with respect to the overall revenues of the company.

Distinguishes core gases growth from overall revenue, which can be lumpy due to project engineering, providing clearer investor focus.

Asked by Ashok Mithinthi

Outlook on demand for H2 FY26 and capacity ramp-up Direct
we are coming up with new capacity which is going to be one at the end of this month and one at the end of the financial year. The capacity which is coming in end of this month, we have good visibility in terms of, you know demand and we expect a quick ramp up of the capacity utilization there

Provides insight into near-term demand and the expected contribution from new capacities, indicating a stronger H2.

Asked by Ashok Mithinthi

Argon revenue contribution and margin targets Direct
Argon was 10%, I think you know we've now reached about 13%. I think long term this number we do expect it to inch up... if the margin EBITDA margin for the company as a whole is 40%., then argon EBITDA margins will definitely be higher than 40%

Highlights the increasing importance and higher profitability of Argon, a key value-added product for the company's long-term strategy.

Asked by Vinita Pandya

Strategy for specialty gases in semiconductor and solar sectors Direct
we have capabilities to supply ultra high purity gases such as ultra high purity nitrogen, ultra high purity oxygen... for traded products... margins would not be as high as a manufactured product, but it would still, you know, probably be in somewhat of 15 to 20% kind of a margin on the traded products thing.

Details the company's entry strategy into high-growth, high-purity gas segments, including both manufactured and traded products, and their expected margins.

Asked by Vinita Pandya / Sumant Kumar

Status of hydrogen electrolyzer pilot and its contribution Direct
while it still remains a very small business... We don't, foresee hydrogen to be a very meaningful contributor to the overall revenue. I think those will still continue to be driven by the air separation gases.

Clarifies that hydrogen, while a strategic addition, is not expected to be a major revenue driver, managing investor expectations regarding its impact.

Asked by Vinita Pandya

Project execution delays for new plants and impact on timelines Direct
Uh merchant plant in the east is expected to commence end of this month. So, there's been about a delay of a month or so... next merchant plant which we had originally guided for, you know, Q2 or so of next year, is now pushed to second-half of next financial year.

Acknowledges and quantifies delays in key capacity expansion projects, which could impact short-term revenue recognition and growth targets.

Asked by Vinita Pandya

Reason for YoY revenue decline and impact of project engineering revenue Direct
Q2 of last financial year we had booked a revenue of about 150 million from project engineering... if you strip out that 150 million of revenue from project engineering in the last financial year Q2, then there is a growth in revenue in fact of about, I think close to 10% percent.

Explains the apparent YoY revenue decline by highlighting the lumpy nature of project engineering revenue, suggesting underlying core gases growth is healthy.

Asked by Vinita Pandya

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Ellenbarrie Industrial Gases reported Q2 FY26 revenues of ₹892 million, marking a 6.7% sequential increase. The company maintained a stable EBITDA margin of 38%, translating to ₹337 million. Profit After Tax (PAT) saw a significant 96% year-on-year surge, reaching ₹367 million, reflecting strong operational discipline and capital efficiency. The core gases business continues to be the primary growth driver, with management emphasizing its resilience and contribution to overall performance.

Capacity Expansion and Project Timelines

The company successfully ramped up operations at its Kurnool and Tata Steel Metaliks plants, with Kurnool's utilization now at 75-80% from 60-65% in Q1. A new merchant plant in East India and a 220 TPD plant are expected to commence production by the end of November 2025. The onsite plant in East India is slated for commissioning by March 2026, while another merchant plant has been pushed from Q2 FY27 to H2 FY27 due to minor execution delays. These expansions will increase total owned and operated capacity to 1910 TPD by end of FY26 and over 2100 TPD by end of FY27.

Strategic Focus: Argon and Specialty Gases

Argon, a high-margin value-added gas, now accounts for 13% of total revenues, up from 10% last quarter, with management expecting this contribution to 'inch up' long-term and its EBITDA margins to be 'higher than 40%.' The company is also actively targeting the solar cell and semiconductor sectors with ultra-high purity gases like nitrogen, oxygen, silane, ammonia, and nitrous oxide. For traded specialty products, margins are anticipated to be in the 15-20% range, and the company has already secured 3 contracts in this space with phenomenal inquiry levels.

GST Impact and Revenue Guidance Clarification

The government's decision to reduce GST on medical oxygen from 12% to 5% was welcomed, making the critical product more affordable. Management clarified its revenue guidance of 20-25% CAGR applies specifically to the core gases business over the next four to five years, using the last full financial year as a base. This distinction is crucial as project engineering revenues are lumpy and can distort overall year-on-year comparisons, which showed a 10% growth in core gases after adjusting for last year's project engineering revenue of ₹150 million.

Geographical Expansion and Market Penetration

Ellenbarrie is actively pursuing geographical expansion to become a pan-India company, with a strong focus on Western, Central, and North India, where it historically had less presence. While a site for a new merchant plant in Western India has been largely finalized, an official announcement is pending. The strategy for penetrating new markets with existing vendors involves leveraging efficient cost of production, existing customer relationships with multi-location operations, and the overall expanding market size, ensuring growth capture across regions.

Hydrogen Electrolyzer Initiative

The company's hydrogen electrolyzer pilot is progressing, with plans to integrate this technology into future air separation plants. However, management emphasized that hydrogen is viewed as another gas in their portfolio, primarily for industrial customers like pharmaceutical and edible oil companies, rather than as a significant energy resource. It is not expected to be a meaningful contributor to overall revenue, which will continue to be driven by air separation gases.

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