Inox India — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Inox India delivered a robust Q3 FY25, with strong revenue and profit growth driven by significant new orders in the LNG and liquid air energy storage segments. The company's order backlog remains healthy at INR 1,341 crores, providing good visibility for future growth. While the beverage kegs segment faced delays and domestic LNG fueling station rollout was slow, the company is confident in achieving its FY25 growth guidance and sees substantial opportunities in new age energy areas like nuclear, hydrogen, and semiconductors.

Highlights

  • Strong Q3 FY25 financial performance with revenue up 18.2% YoY to INR 349 crores, EBITDA up 17% YoY to INR 83 crores, and PAT up 17.4% YoY to INR 57 crores.

  • Secured largest-ever LNG order for Mini LNG receiving and regasification terminals in The Bahamas, featuring 15,000 metric tons of storage capacity.

  • Received a significant contract from Highview Power U.K. for liquid air energy storage tanks, marking INOX India's entry into this cutting-edge clean energy field.

  • Order backlog of INR 1,341 crores as of December 31, 2024, with 63% from exports, providing strong revenue visibility.

  • Earned FSSC 22000 certification for the Stainless Steel Keg segment, enhancing competitive advantage and quality assurance.

Concerns

  • Slower-than-anticipated growth in the beverage kegs segment due to lengthy sampling and approval processes, with Q3 FY25 revenue at INR 7 crores.

  • Domestic order book for LNG fueling stations has been muted, with only 50 out of 1,000 government-declared stations commissioned over 2.5 years.

  • Competition from Chinese manufacturers in LNG fuel tanks, offering products 10-15% cheaper, necessitating anti-dumping measures.

Key financials

3 periods

Headline

  • Net Free Cash
    ₹293 Cr

Q3 FY25

  • Revenue
    ₹349 Cr
    YoY +18.2%
  • EBITDA
    ₹83 Cr
    YoY +17%
  • PAT
    ₹57 Cr
    YoY +17.4%

9M FY25

  • Revenue
    ₹971 Cr
    YoY +10.7%
  • EBITDA
    ₹235 Cr
    YoY +8.6%
  • PAT
    ₹158 Cr
    YoY +4.3%

What they filed

Q1 FY27: revenue up 9.2%, net profit down 6.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue304 332 369 327 356 +17%419 +26%455 +23%357 +9%
EBITDA64 70 81 75 75 +17%90 +29%94 +16%72 −4%
Net profit49 57 65 60 59 +20%59 +4%74 +14%56 −7%
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.

Segment breakdown

  • Q3 Sales Composition
    68% Industrial Gas14% LNG13% Cryo-Scientific
  • Order Backlog Composition (Dec 31, 2024)
    45% Industrial Gas36% LNG19% Cryo-Scientific63% Exports
  • Q3 Order Inflow Composition
    41% Industrial Gas49% LNG10% Cryo-Scientific
  • Beverage Kegs (Q3 FY25)
    ₹7 Cr Revenue13,939 units Units Sold
  • Beverage Kegs (9M FY25)
    ₹19 Cr Revenue
  • Disposable Cylinders (9M FY25)
    ₹91 Cr Revenue14,77,000 units Units Sold (December)

Order book

high confidence

Total value

₹1,341 Cr

as of 2024-12-31 quantified

Inflow this quarter

₹493 Cr

Execution

period of manufacturing is slightly more into these big projects

Composition

Mix 3 segments
  • Industrial Gas 45%
  • LNG 36%
  • Cryo-Scientific 19%

Share of order book by segment

Pipeline

qualified rfp

Bidding for 5-7 LNG projects; GAIL/BPCL to tender for 15-20 stations; 50-75 stations expected by next year.

Cancellations & deferrals

  • deferred: 8-10 LNG fueling stations pending due to land acquisition/customer issues.
Management is confident in the order backlog and expects strong order flows from new age energy areas, with good visibility for the next year.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹80 Cr
    • Capacity-building expansion
    • Infrastructure expansion

    Previously planned ₹100 Cr

    Last year also, we did almost INR 100 crores. And this year also, we are doing INR 80 crores to INR 100 crores. And we are almost now ready for next 2 years from the Capex perspective and infrastructure perspective, we are now ready.
  • Debt Debt disclosed
    The Company has a comfortable net free cash of 293 crores as of December '24, which provides us adequate room to raise debt in the future.
  • Liquidity Cash ₹293 Cr Net free cash provides adequate room to raise debt in the future.
    The Company has a comfortable net free cash of 293 crores as of December '24, which provides us adequate room to raise debt in the future.

Guidance & targets

Revenue

  • FY25 Revenue Growth Revenue · FY25 · High confidence 18-20%
    Our guidance, what we have provided is like around 18% to 20% growth year-on-year. I think we are very confident to achieve.

    — Deepak Acharya

  • FY25 Total Revenue Revenue · FY25 · High confidence INR 1,350 crores
    our target numbers are around INR 1,350 crores for this year. So, it's around INR 400 crores we have to do.

    — Deepak Acharya

  • Q4 FY25 Revenue Revenue · Q4 FY25 · High confidence INR 400+ crores
    400-plus crore revenue will be minimum what we can achieve in Quarter 4.

    — Deepak Acharya

  • Revenue Doubling Revenue · next 3-4 years · Medium confidence 3-4 years
    So, doubling will be almost like 3 and 3.5 years or 4 years max.

    — Deepak Acharya

Profitability

  • EBITDA Margin Profitability · FY25 · High confidence 21-25%
    Our expected EBITDA must be 21% to 25%.

    — Pavan Logar

Order Inflow

  • Quarterly Order Inflow Order Inflow · per quarter · Medium confidence INR 350+ crores
    we will be adding around 350 crore or odd every quarter. We will have at least 15% to 20% growth every quarter now.

    — Deepak Acharya

Volume

  • Beverage Kegs Production Volume · next 1-2 years · Medium confidence 300,000 kegs
    we have put our plan for 300,000 kegs, and we should achieve that in next 1 or 2 years now.

    — Deepak Acharya

Market Share

  • LNG Fueling Station Market Share Market Share · current · High confidence 65-70%
    our LNG fueling station and LCNG station, our market share is almost like 65% to 70%. That is our ratio as on today.

    — Deepak Acharya

Capacity

  • LNG Fueling Stations Commissioned Capacity · by next year · Medium confidence 50-75 stations
    maybe by next year, at least another 50 to 75 stations should come by next year.

    — Deepak Acharya

Project Timeline

  • ISRO 3rd Launchpad Tender Release Project Timeline · by end of next year · Medium confidence end of next year
    If all that goes well, only by end of the next year that is third or fourth quarter, only we can expect some order.

    — Deepak Acharya

  • ISRO 3rd Launchpad Revenue Generation Project Timeline · 12-18 months after tender release · Medium confidence 12-18 months after tender
    And the revenue generation will take place around 12 to 18 months after that.

    — Deepak Acharya

What to watch in Q4 FY25

Q4 FY25 Revenue Achievement

Next quarter (Q4 FY25 results)
Current INR 971 crores (9M FY25 revenue)
Target At least INR 400 crores (to meet FY25 target of INR 1,350 crores)

Why it matters

Verifies management's confidence in a strong Q4 execution to meet annual guidance, especially after Q3.

I don't think 50% we have to achieve because so far, we have achieved around INR 971 crores and our target numbers are around INR 1,350 crores for this year. So, it's around INR 400 crores we have to do.

Risks & concerns

  • Competition from Chinese manufacturers in LNG fuel tanks

    medium

    Chinese products are 10-15% cheaper, leading to anti-dumping case to protect margins.

    Management acknowledged

  • Slow rollout of domestic LNG fueling stations

    medium

    Only 50 out of 1,000 government-declared stations commissioned in 2.5 years, impacting demand.

    Management acknowledged

  • Lengthy approval processes for beverage kegs

    medium

    Customer sampling and audits for major breweries take up to 3 months, delaying market penetration.

    Management acknowledged

  • Lumpiness of big projects affecting quarterly order inflow

    low

    Large LNG and Cryo-Scientific projects are not recurring quarterly, leading to variability in order booking.

    Management acknowledged

Q&A highlights

6 direct
FY26 Growth & Margins Direct
Our guidance, what we have provided is like around 18% to 20% growth year-on-year. I think we are very confident to achieve... Our expected EBITDA must be 21% to 25%.

Analyst sought clarity on future growth and margin trajectory beyond FY25, which management addressed with specific targets and confidence.

Asked by Prakash Kapadia

Q4 Revenue Confidence Direct
I don't think 50% we have to achieve because so far, we have achieved around INR 971 crores and our target numbers are around INR 1,350 crores for this year. So, it's around INR 400 crores we have to do... 400-plus crore revenue will be minimum what we can achieve in Quarter 4.

Analyst challenged the implied Q4 revenue jump needed for FY25 guidance, and management provided a clear rationale based on historical seasonality and current backlog.

Asked by Athreya Ramkumar

Beverage Kegs Growth Delays Direct
the procedure in the industry is slightly different, because we were just comparing with our other products. But here for the major breweries, they take your kegs for sampling, and they keep it in their breweries for almost 3 months... approval for the major breweries will happen in Quarter 3, which is now getting shifted to Quarter 4.

Analyst highlighted a segment underperforming expectations, and management explained the specific industry-related challenges and timeline for resolution.

Asked by Deepesh Agarwal

Domestic Order Book & LNG Fueling Stations Partial
government has declared 1,000 stations and now 2.5 years are over, only 50 have been commissioned so far. And I hope that speed will take place for this fueling station, and more and more fuel station will come.

Analyst probed on the slow progress of a key domestic growth driver, revealing a significant gap between government targets and actual commissioning.

Asked by Deepesh Agarwal

ISRO Project Revenue Flow Direct
RFQ is in process. It will take around 5 to 6 months for making the RFQ, and then only the tender will be released. If all that goes well, only by end of the next year that is third or fourth quarter, only we can expect some order. And the revenue generation will take place around 12 to 18 months after that.

Analyst sought clarity on the timeline for a major government project, and management provided a detailed, multi-stage, long-term outlook for revenue realization.

Asked by Dhruv Shah

Other Expenses Increase Direct
we got a very big order from this ITER India for repairing of their products... in which the material cost is very less, but the manpower cost and repairing cost is very high, which is moved in other expenses... That is the reason that my EBITDA is the same only.

Analyst questioned a significant increase in other expenses, and management provided a clear, non-recurring explanation, reassuring on margin impact.

Asked by Athreya Ramkumar

New Venturing Areas Direct
Semiconductor industry is another area which we are finding that now around INR 2 lakh crore orders are already in place. So, it also requires a huge amount of industrial gases or high purity... already we are delivering to Micron in USA for such applications.

Analyst asked about future growth avenues, and management revealed specific, high-potential new markets like semiconductors, steel, and ammonia, indicating diversification strategy.

Asked by Sanjay Shah

LNG Order Inflow Run Rate Partial
it's very difficult question to answer, but definitely, this quarter, I told you that we had 2 big orders... if we continue to get in future, we will be adding around 350 crore or odd every quarter. We will have at least 15% to 20% growth every quarter now.

Analyst questioned the sustainability of the high Q3 order inflow, and management clarified that while large projects are lumpy, a healthy baseline growth rate is expected.

Asked by Dhruv Shah

3 min read 6 chapters

Detailed narrative

Robust Q3 FY25 Performance and FY25 Outlook

Inox India reported a strong Q3 FY25, with revenue growing 18.2% YoY to INR 349 crores, EBITDA increasing 17% YoY to INR 83 crores, and PAT rising 17.4% YoY to INR 57 crores. For the nine months ended December 31, 2024, revenue stood at INR 971 crores, up 10.7% YoY. Management expressed high confidence in achieving its FY25 revenue growth guidance of 18-20% and an EBITDA margin of 21-25%, projecting at least INR 400 crores in Q4 revenue to reach the annual target of INR 1,350 crores.

Significant Order Wins in LNG and Clean Energy

The company secured its largest-ever LNG order for Mini LNG receiving and regasification terminals in The Bahamas, featuring an unparalleled collective storage capacity of 15,000 metric tons. Additionally, Inox India entered the liquid air energy storage market with a significant contract from Highview Power U.K. for 5 vertical 690-meter-cube high-pressure cryogenic tanks. These wins contributed to a Q3 order inflow of INR 493 crores and a total order backlog of INR 1,341 crores as of December 31, 2024, with 63% from exports.

Strategic Focus on New Age Energy Segments

Inox India is actively positioning itself in emerging clean energy sectors, including nuclear energy (supporting Small Modular Reactors with cryogenic solutions), hydrogen handling, and ammonia transport. The company is also exploring opportunities in the semiconductor industry, already delivering specialized tanks and piping to Micron in the USA, and sees significant potential from the steel industry's expansion to 300 million tons by 2030, which could bring INR 4,000-5,000 crores in new investments for cryogenic business.

Challenges and Progress in Domestic Segments

The beverage kegs segment experienced slower-than-anticipated growth, with Q3 revenue of INR 7 crores from 13,939 kegs, primarily due to lengthy customer sampling and approval processes. However, the company secured FSSC 22000 certification, a first in Asia, and expects major brewery approvals in Q4 FY25. The rollout of domestic LNG fueling stations has been slow, with only 50 commissioned out of 1,000 government-declared stations, though management anticipates acceleration with increasing private sector interest and tenders for 15-20 new stations from GAIL/BPCL.

Capital Expenditure and Operational Efficiency

Inox India is undertaking capacity-building and infrastructure expansion, with an estimated spend of INR 80-100 crores this fiscal year, following INR 100 crores last year. This expansion is expected to be completed by March end, ensuring readiness for future growth. The company reported INR 293 crores in net free cash as of December 2024, providing financial flexibility. A rise in other expenses was attributed to high manpower and repairing costs for a large INR 200+ crores ITER India order, which did not negatively impact EBITDA margins.

Competitive Landscape and Entry Barriers

Management highlighted significant entry barriers in the cryogenic industry, primarily due to stringent approval processes (e.g., 1.5 years for DoT, 1 year for ASME), specialized cryogenic knowledge, and extensive R&D. While facing competition from US and Chinese manufacturers, Inox India leverages its design flexibility and ability to handle custom-built projects, giving it an upper hand over standard product offerings from Chinese competitors, which are 10-15% cheaper.

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