Ellenbarrie Industrial Gases IPO: From Key Dates to Risks, 10 Crucial Things to Know from the RHP

As Ellenbarrie Industrial Gases Limited gears up for its Initial Public Offering (IPO), investor interest is steadily gaining momentum. The company, known for its longstanding presence in the industrial gases market in India, has released its Red Herring Prospectus (RHP), outlining significant information for potential investors. From issue size and objectives to financials and associated risks, here are the 10 key takeaways you must know before making an investment decision.

1. IPO Opening and Closing Dates

According to the RHP, the Ellenbarrie Industrial Gases IPO will open for subscription on June 24, 2025, and close on June 27, 2025. The anchor book, for qualified institutional buyers (QIBs), will open a day prior, on June 21.

2. Issue Size and Structure

The IPO consists of a fresh issue of shares aggregating up to ₹120 crore and an Offer for Sale (OFS) of up to ₹80 crore by existing shareholders, including promoters. The total issue size amounts to ₹200 crore. The proceeds from the fresh issue will primarily be used to fund capital expenditure, repay borrowings, and enhance working capital.

3. Price Band and Lot Size

The price band for the issue has been set between ₹315 and ₹330 per share, with a lot size of 45 shares. Retail investors will need to invest a minimum of ₹14,175 at the lower end of the price band.

4. Company Overview and Business Model

Founded in 1973, Ellenbarrie Industrial Gases is a Kolkata-based company engaged in the manufacturing and supply of industrial gases such as oxygen, nitrogen, argon, and carbon dioxide. The company operates through on-site plants, merchant sales, and bulk delivery models, catering to industries like steel, pharmaceuticals, petrochemicals, and healthcare.

Its strategic positioning in Eastern and Southern India and long-standing client relationships have given it a competitive edge.

5. Financial Performance Snapshot

The company has shown stable revenue growth in recent years. For FY24, Ellenbarrie Industrial Gases reported:

• Revenue: ₹385.2 crore (up from ₹342.8 crore in FY23)

• EBITDA: ₹74.5 crore

• PAT: ₹41.7 crore

• EBITDA Margin: ~19.3%

However, analysts noted that margins have slightly compressed due to rising power costs and transportation expenses.

6. Promoters and Shareholding Pattern

The company is currently promoted by the Jha family, who collectively hold around 78% of the pre-issue equity. Post-IPO, the promoter shareholding is expected to come down to around 58%, allowing more public participation and improved liquidity.

7. Use of IPO Proceeds

As per the RHP, the net proceeds from the fresh issue will be utilized for:

• Setting up a new oxygen plant in Andhra Pradesh (₹35 crore)

• Repayment/prepayment of certain borrowings (₹40 crore)

• Funding working capital needs (₹25 crore)

• General corporate purposes

This strategic capex move is expected to strengthen the company's foothold in South India.

8. Industry Outlook

The Indian industrial gases market is projected to grow at a CAGR of 7.5%, driven by demand from steel, automotive, and medical sectors. The sector gained prominence during the COVID-19 crisis due to oxygen supply constraints, pushing companies to scale up infrastructure.

“With India's manufacturing push under ‘Make in India’, the long-term outlook for the industrial gas sector remains promising,” said Arvind Bhalla, Capital Markets Analyst at FinBridge Securities.

9. Key Risks Highlighted in RHP

Investors should be mindful of the risks disclosed in the RHP, including:

• High dependence on a few clients: Top five customers contribute over 40% of revenue.

• Raw material and power cost volatility: Margins are sensitive to input prices.

• Geographic concentration: Limited presence outside Eastern and Southern India.

• Environmental and safety risks: Operating in hazardous chemical environments poses regulatory and safety challenges.

• Pending litigation: The company is involved in a few tax-related disputes, though not material in nature.

10. Analyst Take and Investor Outlook

Ellenbarrie’s established presence, consistent financials, and expansion plans present a balanced investment opportunity, say analysts. However, valuation comfort and future margin trajectory will be key determinants for long-term returns.

“While the IPO is reasonably priced considering peer valuations like Linde India and Inox Air Products, investors should assess growth visibility beyond FY26, particularly post new plant commissioning,” said Mehul Ranka, Analyst at Axis Securities.

Retail investors with a medium- to long-term horizon may find value, provided they are comfortable with the industry’s cyclical nature and operational risks.

The Ellenbarrie Industrial Gases IPO brings to market a legacy industrial player with strong sector fundamentals and expansion ambitions. The company’s clear roadmap, coupled with growing demand for industrial gases in India, offers a compelling story. However, risks related to customer concentration and margin pressure warrant a cautious approach. Investors should evaluate the IPO not just on listing gains, but also on the company’s capacity to deliver sustainable growth in a competitive industry.