Ellenbarrie Industrial Gases Limited — Q3 FY26 earnings call

Call held 3 Feb 2026

Management summary

Ellenbarrie Industrial Gases reported a challenging Q3 FY26 with sequential declines in revenue and EBITDA, primarily driven by lower Argon realizations and one-off costs. Despite these headwinds, the company remains constructive on its long-term growth trajectory, having commissioned a new plant and progressing on several other capacity expansion projects, while maintaining a strong net cash position and focusing on cost optimization.

Highlights

  • Commissioned Uluberia 2 merchant plant, adding 220 TPD liquid product capacity, with ramp-up proceeding well.

  • Progressing on significant new capacity additions including East India on-site plant (Q1 FY27) and North India bulk plant (H2 FY27).

  • Maintained a strong balance sheet with a net cash position of ₹355 crores.

  • Actively working on power cost optimization and signing renewable energy contracts to reduce the single largest cost item.

  • Management expects Q4 FY26 performance to be significantly better than Q3 FY26 due to the impact of new capacities.

Concerns

  • Revenue from operations declined 9% QoQ to ₹81.3 crores.

  • EBITDA declined 25% QoQ to ₹25.3 crores.

  • EBITDA margins compressed from 38% in Q2 to 31% in Q3.

  • Low Argon realizations, which declined over 25%, due to a softer steel environment and oversupply from captive gas plants.

  • Elevated one-off costs contributed to margin pressure during the quarter.

Key financials

  1. Revenue from Operations ₹81.3 Cr -9%QoQ
  2. Total Income ₹97.4 Cr
  3. EBITDA ₹25.3 Cr -25%QoQ
  4. EBITDA Margin 31%
  5. PAT ₹26.1 Cr
  6. 9-month YTD EBITDA Margin 36%

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
    • Capacity expansion for Uluberia 2 merchant plant, East India on-site plant, North India bulk plant, and Western plant with specialty gases ₹450 Cr
    As per his stated position, net cash is at 3,550 million and we remain disciplined on Capex with guidance of rupees 2,500 million in FY26 and rupees 2,000 million in FY27. We are working on multiple expansion projects which will continue to drive the long-term growth of the company.
  • Debt Debt disclosed
    As per his stated position, net cash is at 3,550 million and we remain disciplined on Capex with guidance of rupees 2,500 million in FY26 and rupees 2,000 million in FY27.
  • Liquidity Cash ₹355 Cr Company operates with a strong balance sheet and a net cash position.
    As per his stated position, net cash is at 3,550 million and we remain disciplined on Capex with guidance of rupees 2,500 million in FY26 and rupees 2,000 million in FY27.

Guidance & targets

Profitability

  • Long-term EBITDA Margin Profitability · Long-term · High confidence 40%
    Yes, we do hold on to EBITDA margins of around 40%.

    — Mr. Varun Agarwal

  • Q4 FY26 Performance Profitability · Q4 FY26 · Medium confidence Much better than Q3
    So, we do hope that Q4 would be much better than Q3.

    — Mr. Varun Agarwal

Revenue

  • Long-term Revenue CAGR Revenue · Long-term · High confidence 20-25%
    So again our 20-25% CAGR is of course a long-term CAGR and this typically the growth will tend to be a little bit lumpy in the sense that whenever we bring in new capacity that's where you'll see the growth being pushed forward.

    — Mr. Varun Agarwal

  • FY27 Revenue Growth Revenue · FY27 · Medium confidence Growth expected
    I think it's only logical to say that there will be a growth.

    — Mr. Varun Agarwal

Capacity

  • New plant capacity utilization ramp-up Capacity · from date of startup · High confidence 85% over 18 months
    But typically, we look at an 85% capacity utilization over a period of 18 months from the date of startup.

    — Mr. Varun Agarwal

  • East India on-site plant commissioning Capacity · Q1 FY27 · High confidence Q1 FY27

    Previously Q4 FY26 → Q1 FY27

    So I think this is basically delay of let's say about a couple of months... Here too I think we are on track for Q1 of FY27 which would mean a couple of months really

    — Mr. Varun Agarwal

  • North India bulk plant commissioning Capacity · H2 FY27 · High confidence H2 FY27
    North India bulk plant 220 targeted H2 FY27.

    — Mr. Varun Agarwal

  • Western plant (specialty gases) commissioning Capacity · FY28 · High confidence FY28
    the plant in the west along with the speciality gases we are targeting FY28.

    — Mr. Varun Agarwal

Capex

  • Total capex for three new projects Capex · next couple of years · High confidence ₹450 crores
    All of these put together would entail capex over the next couple of years to the tune of about 450 crores

    — Mr. Varun Agarwal

What to watch in Q4 FY26

Uluberia 2 plant capacity utilization ramp-up

Next quarter (Q4 FY26)
Current Early days, moving well
Target Faster than typical 85% utilization over 18 months

Why it matters

This recently commissioned plant is expected to drive faster revenue growth and improve overall performance.

We would expect to while we are talking of an 18 month ramp up for to get to an 85% capacity utilization. Here we've done because this is a market that we are already present in and we have very strong relations with a lot of the large buyers. We would expect to ramp up this production little bit faster than that.

Risks & concerns

  • Low Argon realizations

    high

    Argon prices declined over 25% in Q3 FY26 due to a softer steel sector and oversupply from captive plants, significantly impacting EBITDA margins.

    Management acknowledged

  • Elevated one-off costs

    medium

    Other expenses were elevated compared to Q3 last year due to certain one-off costs, contributing to lower profitability.

    Management acknowledged

  • Softness in steel sector

    medium

    The softness in the steel sector led to slightly lower sequential volumes and significantly impacted Argon realizations.

    Management acknowledged

  • Project execution delays

    low

    The East India on-site plant commissioning timeline shifted by a couple of months from Q4 FY26 to Q1 FY27, attributed to typical greenfield project execution challenges.

    Management acknowledged

Q&A highlights

7 direct
Sustainable EBITDA margin and Argon pricing normalization Direct
Yes, we do hold on to EBITDA margins of around 40%. This was a weak quarter that we just finished. If you broadly look at the 9-month EBITDA margins on a financial year-to-date basis we are still at about 36%.

Clarifies the company's long-term margin aspiration despite current quarter's dip and explains the drivers for future margin improvement.

Asked by Devika

Core gas growth vs. long-term CAGR target and revenue run rate Direct
So again our 20-25% CAGR is of course a long-term CAGR and this typically the growth will tend to be a little bit lumpy in the sense that whenever we bring in new capacity that's where you'll see the growth being pushed forward.

Explains the lumpy nature of growth in the industry due to capacity additions and reiterates the long-term CAGR target.

Argon revenue mix, EBITDA margin, and price decline Direct
So, Argon this quarter is close to about 10% in terms of the revenue. The margins have again we don't report margins on a per gas basis... The Argon prices have declined in the last quarter by more than 25%.

Provides specific data on Argon's contribution to revenue and the extent of price decline, which was a key factor for margin compression.

Ramp-up timeline and revenue potential for the recently commissioned Uluberia 2 plant Partial
So, the plant has been commissioned recently so I think it's very early to comment on how much revenue has started. But typically, we look at an 85% capacity utilization over a period of 18 months from the date of startup.

Sets expectations for the new plant's contribution, indicating it's too early for revenue impact but providing a typical ramp-up benchmark.

Total addressable market size and Ellenbarrie's market share Direct
No, I think there is some gap in the understanding. Prashant, I think our market share is in the sort of mid-single digits... I think the market available to kind of the gas industry is when we had last done the industry report was somewhere in the region of about 15,000 crores and it was growing at about 10 odd percent on an annualized basis.

Corrects a misconception about market share and provides a clear estimate of the overall market size and growth rate.

Asked by Prashant

Competition and strategy in solar and specialty gases Direct
So, I think they have won a number of the legacy contracts which were on the block. We have also won some contracts... But given that there is a significant size differential between us and them I think for us even if we get a smaller piece of the pie it still bodes well for our future growth.

Addresses competitive landscape in a new growth area and outlines the company's realistic approach to gaining market share.

Asked by Vatsal Bhandari

Capex and margins for solar gases vs. traditional ASU gases Direct
See the capex is not very heavy here in terms of solar gases because we are not really going to be manufacturing a lot of them right so it's mostly going to be traded... the margins would become like your typical trading and service in terms of last mile delivery that sort of margin which would be in the teens.

Clarifies the business model and margin profile for the new specialty gases segment, distinguishing it from core manufacturing.

Asked by Vatsal Bhandari

East India on-site plant commissioning timeline shift Direct
So I think this is basically delay of let's say about a couple of months... Here too I think we are on track for Q1 of FY27 which would mean a couple of months really and for typically for a project which takes let's say about 15 odd months to commission a month or two delay can happen over the course of the construction of the project.

Acknowledges a minor delay in a key project, provides context on typical project execution risks, and confirms the revised timeline.

2 min read 5 chapters

Detailed narrative

Q3 FY26 Financial Performance and Sequential Headwinds

Ellenbarrie Industrial Gases reported a challenging Q3 FY26, with Revenue from Operations at ₹81.3 crores, marking a 9% sequential decline. EBITDA also saw a significant 25% QoQ drop to ₹25.3 crores, leading to a margin compression from 38% in Q2 to 31% in Q3. The primary factors for this underperformance were low Argon realizations, which declined over 25% due to a softer steel environment and market oversupply, coupled with elevated one-off costs compared to the previous year.

Strategic Capacity Expansion and Project Timelines

The company remains focused on long-term growth through strategic capacity additions. The Uluberia 2 merchant plant, with a capacity of 220 tons per day of liquid products, was recently commissioned and is now in the ramp-up phase, expected to achieve 85% utilization over 18 months. Further expansions include an East India on-site plant (320 TPD) targeted for Q1 FY27, a North India bulk plant (220 TPD) for H2 FY27, and a Western plant with specialty gases by FY28. The total capex for these three projects is estimated at approximately ₹450 crores over the next couple of years.

Margin Outlook and Cost Optimization Efforts

Despite the Q3 margin compression to 31%, management reiterated its long-term EBITDA margin aspiration of 40%, noting that the 9-month YTD margin stood at 36%. This improvement is expected from the higher efficiency of new capacities, increased on-site capacity, and anticipated normalization of Argon prices. A key focus for cost optimization is power, the single largest cost item, with plans to sign a renewable energy contract to enhance sustainability and reduce operational expenses.

Market Landscape and Specialty Gases Strategy

The total addressable market for the gas industry is estimated at ₹15,000 crores, growing at about 10% annually, with Ellenbarrie holding a mid-single-digit market share. The company is actively pursuing growth in the solar and semiconductor sectors, having signed contracts with a couple of solar players and engaging in discussions for more. The Western region facility will integrate a high purity oxygen/nitrogen plant with a warehouse and bottling station for specialty gases, which are primarily traded products with expected margins in the teens, distinct from core manufacturing margins.

Capital Allocation and Balance Sheet Strength

Ellenbarrie maintains a strong balance sheet with a net cash position of ₹355 crores. The company has provided capex guidance of ₹250 crores for FY26 and ₹200 crores for FY27, demonstrating disciplined capital allocation towards its expansion projects. Management emphasized that the business is long-term in nature, with growth occurring in step changes as new capacities become operational, and expects an overall improvement in revenue for FY27 driven by these new capacities.

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