Ellenbarrie Industrial Gases IPO: A Comprehensive Overview

The recent initial public offering (IPO) of Ellenbarrie Industrial Gases Limited (EIGL) has captured significant attention in the financial markets, concluding with a robust subscription rate on its final day of bidding. This article delves into the details of the IPO, its implications, and what potential investors should consider.

IPO Subscription Details

Ellenbarrie’s IPO was met with overwhelming enthusiasm, receiving bids for 33.52 crore shares against a total issue size of 1.51 crore shares. The subscription figures reveal a strong demand across various investor categories:

• Retail Investors: Subscribed just over 2 times.
• Non-Institutional Investors (NII): Subscribed 15 times.
• Qualified Institutional Buyers (QIB): Subscribed an impressive 64 times.

Overall, the IPO was subscribed 22.19 times, indicating robust investor confidence in the company’s future prospects.

Grey Market Performance

In the grey market, Ellenbarrie’s shares were trading at a premium of Rs 18–19, a slight decline from Rs 25–26 observed on Day 2 of the bidding. This drop in the grey market premium (GMP) to around 5% from 6% suggests a cautious sentiment among investors, despite the strong subscription numbers.

Key IPO Details

The Ellenbarrie IPO comprises a fresh equity issuance worth Rs 400 crore, alongside an offer for sale (OFS) of 1.13 crore shares. Prior to the IPO launch, the company successfully raised Rs 256 crore from anchor investors, showcasing strong institutional backing.

Price Band and Application Size

The price band for the IPO has been set between Rs 380 and Rs 400 per share, with a minimum application size of 37 shares. The shares are expected to be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Utilization of IPO Proceeds

The proceeds from the IPO will be strategically allocated as follows:

• Debt Repayment: Rs 210 crore to reduce financial liabilities.
• New Plant Establishment: Rs 104.5 crore to set up a 220 TPD air separation unit at the Uluberia-II plant.
• General Corporate Requirements: Remaining funds will be used for various corporate needs.

EIGL also has plans to commission three new plants by FY26, aiming to increase its total installed capacity from 3,861 TPD to 4,551 TPD.

Company Overview

Founded over five decades ago, Ellenbarrie Industrial Gases Limited is a prominent player in the industrial gases sector. The company manufactures and supplies a diverse range of gases, including oxygen, nitrogen, argon, and acetylene, along with specialty and medical gases. EIGL operates nine facilities across East, South, and Central India, catering to industries such as steel, pharmaceuticals, defense, healthcare, and railways.

Financial Performance

In FY25, Ellenbarrie reported a 26.7% PAT margin with a net profit of Rs 83.3 crore. The company also achieved an EBITDA margin of 35.8% and a return on equity of 16.9%. At the upper end of the price band, the stock is valued at 62.9 times FY25 earnings, reflecting a competitive valuation in the market.

Investment Outlook

SBI Securities has rated the Ellenbarrie IPO as a Subscribe, citing several positive factors:

• Improving Margin Profile: The company has shown consistent growth in profit margins.
• Strong Client Base: EIGL services a diverse range of industries, ensuring a stable revenue stream.
• Strategic Capacity Expansion: The planned increase in production capacity positions the company for future growth.
• Attractive Valuation: Compared to peers like Linde India, Ellenbarrie presents a compelling investment opportunity.

Conclusion

The IPO of Ellenbarrie Industrial Gases Limited has generated significant interest among investors, underscored by strong subscription rates and institutional backing. With strategic plans for expansion and a solid financial foundation, EIGL is poised for growth in the industrial gases sector. Potential investors should weigh the company’s prospects against market conditions and their investment strategies before making decisions.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own and do not represent the views of the Economic Times.)