Ellenbarrie plans to raise Rs 400 crore through fresh equity to reduce debt and expand capacity
Ellenbarrie Industrial Gases plans to raise ₹400 crore through fresh equity and ₹452.5 crore via offer for sale to reduce debt and fund expansion. While margins and return ratios improved, geographic concentration and rising receivables pose risks. The IPO is suitable for long-term investors with high-risk tolerance, despite a high P/E multiple.
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ET Intelligence Group: Ellenbarrie Industrial Gases, a Kolkata-based manufacturer of oxygen, nitrogen, carbon dioxide and other gases for industrials purpose, plans to raise ₹400 crore through fresh equity to repay debt and for capital expenditure, and another ₹452.5 crore through an offer for sale. The promoter group's stake will fall to over 77% after the IPO from 96.5% considering the pre-IPO allotment to Motilal Oswal Mutual Fund. The planned debt reduction and capacity addition provide a road map for earnings growth.The company has shown improvement in margins and return ratios. However, investors should be mindful of certain risks including geographic concentration and rising receivables. Given these factors, the issue looks suitable for long-term investors with a high-risk appetite.Ellenbarrie generates over 87% of gas sales revenue from oxygen and nitrogen. Its top 10 customers are located in east and south India, and five of its nine manufacturing facilities are based in West Bengal. This regional concentration means any localised economic, social, or political disruption could adversely impact operations.The company will utilise IPO proceeds worth ₹104.5 crore to set up a 220 tonnes-per-day (TPD) air separation unit at the Uluberia-II plant. More than one-third of the revenue comes from either government or public sector undertaking tenders. This may result in revenue volatility. Trade receivables have increased-from 16.8% of revenue in FY24 to 26.8% in FY25-indicating longer collection cycles that could put pressure on cash flows.Revenue grew by 23% annually to ₹312.1 crore while net profit nearly trebled to ₹83.3 crore between FY23 and FY25. Ebitda margin) expanded to 35.1% from 16.4% during the period. Return on equity nearly doubled to 16.9%. However, the net debt-to-equity ratio rose to 0.32 in FY25 from 0.01 in FY23, due to capacity investments. Of the fresh issue proceeds, ₹210 crore will be used to prepay existing borrowings, which were ₹264.2 crore at the end of April.The company demands a P/E multiple of 67.8 considering FY25 earnings. This is lower than Linde India 's P/E of 147. Linde reported revenue and net profit of ₹2,485 crore and ₹455 crore respectively and Ebitda margin of 30.8% for FY25.
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