The shares of the Small-Cap company specializing in the manufacturing and supply of industrial, medical, and specialty gases, are in focus after a leading Indian brokerage firm, Motilal Oswal, initiated a Buy target of Rs. 680 with a 26 percent Upside Potential and bull case target of Rs. 836 with a 55 percent upside potential.
With a market capitalization of Rs. 7,800.08 crores on Tuesday, the shares of Ellenbarrie Industrial Gases Ltd closed at Rs. 553.45, making a high of Rs. 557.00 per share compared to its previous closing price of Rs. 538.15 per share.
Ellenbarrie Industrial Gases, engaged in the manufacturing and supply of industrial, medical, and specialty gases, is in focus after a leading indian brokerage firm, Motilal Oswal, initiated a Buy Target of Rs. 680 on it with an upto 26 percent Upside Potential from the previous day’s close.
The reasons for the “Buy” target
Strong Business Model with Entry Barriers: Ellenbarrie operates in a high-entry-barrier industry, supported by long-term pipeline contracts and essential industrial applications, ensuring stable revenue and strong customer retention.
Favorable Industry Growth: The industrial gas market in India is projected to grow at a 7.5% CAGR, from $1.3 billion in 2024 to $1.75 billion by 2028, providing a supportive environment for the company’s expansion plans.
Significant Capacity Expansion: The company has increased its production capacity 4.5 times between FY23 and FY25 to 3,870 TPD (tonnes per day) and plans to further scale it up to 4,630 TPD by FY27, which will drive volume growth and operational leverage.
Entry into High-Purity Gases: Ellenbarrie sees strong future potential in the electronics industry and is targeting high-purity gases, a high-margin segment with growing demand.
Strong Financial Growth Outlook: Motilal Oswal expects a 39% CAGR in revenue, 49% in EBITDA, and 52% in PAT from FY25 to FY28, backed by ramping up capacities, diversification, and improved operating performance.
EBITDA Growth and Margin Expansion: EBITDA is forecast to grow 39% in FY26, 42% in FY27, and 43% in FY28, driven by increased contribution from argon, green energy initiatives, and efficient scale-up of capacities.
Focused Growth Strategy: The company’s expansion is focused on key industrial clusters, allowing proximity to customers, lower logistics costs, and better asset utilization.
In its bull case, Motilal Oswal sets a price target of ₹836 for Ellenbarrie, implying a 55% upside. This is based on a 45% revenue CAGR over FY25–28, driven by faster expansion into new geographies. EBITDA margins are expected to rise by 990 basis points to 45% by FY28, supported by improved realizations, a better product mix, and strong operating leverage.
Also read: Ashish Kacholia backed stock in focus after promoter offloads 2 Lakh shares in the company
Financials & Others
The company’s revenue rose by 24.28 percent from Rs. 67 crore to Rs. 84 crore in Q1FY24-25. Meanwhile, the Net profit rose from Rs. 16 crore to Rs. 19 crore during the same period.
Ellenbarrie maintains a healthy financial profile with a Return on Capital Employed (ROCE) of 18.2%, Return on Equity (ROE) of 17.8%, and a comfortable debt-to-equity ratio of 0.50, indicating efficient capital usage and manageable leverage.
Ellenbarrie Industrial Gases Ltd is a leading player in the industrial gases sector, with a strong presence across West Bengal, Andhra Pradesh, and Telangana. With over 50 years of legacy, the company has built deep-rooted relationships and a reliable market position. In FY25, Ellenbarrie generated ₹3,124.83 million in revenue, with 93.59% coming from the sale of gases and related services, and the remaining 6.41% from project engineering services.
The company offers a diverse portfolio of gases, including oxygen, nitrogen, argon, acetylene, hydrogen, carbon dioxide, helium, and other specialty gases, catering to a wide range of industries.
Its customer base is well-diversified across bulk (66.75%), package (17.61%), and onsite (15.64%) supply models. Ellenbarrie maintains over 39,000 cylinders in circulation and has installed systems at more than 257 bulk customer sites, backed by an average contractual tenure of five years. Notably, two out of every three customers have long-term contracts extending beyond 15 years.
Written by Sridhar J
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