What is the story about?
Brokerage firm Motilal Oswal has initiated coverage on Ellenbarrie Industrial Gases Ltd. on Monday, September 8, with a "buy" recommendation and a price target of ₹680 per share.
Motilal Oswal's price
target implies a potential upside of 31% from Friday's closing levels.
The brokerage wrote in its note that Ellenbarrie Industrial Gases' business model is underpinned by strong customer retention and high entry barriers, arising from the core nature of industrial gases and the structural rigidity of long-term pipeline contracts.
India's industrial gas demand is projected to reach $1.75 billion by calendar year 2028 from $1.3 billion in 2024, growing at a Compounded Annual Growth Rate (CAGR) of 7.5%, which provides a favourable
backdrop forthe company's expansion strategy.
Ellenbarrie has already increased its capacity by 4.5x over financial year 2023-2025 to 3,870 tonnes per day, and has intentions to scale the same to 4,630 tonnes per day b financial year 2027. The company also sees future opportunities in electronics through high purity gases.
All of these factors, along with the company's capacity expansion in key clusters positions the company for stable growth and margin expansions, Motilal Oswal said.
"We expect
Ellenbarrie to maintain a strong EBITDA growth trajectory of 39% in financial year 2026, 42% in financial year 2027 and 43% in financial year 2028, driven by higher contributions from argon, green energy initiatives and capacity ramp-up," Motilal Oswal said.
Motilal Oswal also expects a 39% revenue CAGR, 49% EBITDA CAGR and a 52% Profit After Tax CAGR for the company over financial year 2025-2028.
Dependence on key customer relationships, prolonged disruption in facilities and slower demand in key sectors like
steel are some of the key downside risks that Motilal Oswal highlights for Ellenbarrie.
For its bull case, Motilal Oswal has a price target of ₹836 for Ellenbarrie, which implies a potential upside of 60% from Friday's closing levels. Here, it is assuming a revenue CAGR of 45% over financial year 2025-2028 led by faster penetration in newer geographies. EBITDA margins are likely to expand by nearly 990 basis points to reach nearly 45% by financial year 2028, led by better realisations, improving product mix and favourable operating leverage.
Shares of Ellenbarrie Industrial Gases are trading 3.1% higher at ₹540. The stock trades above its IPO price of ₹400.
Motilal Oswal's price
The brokerage wrote in its note that Ellenbarrie Industrial Gases' business model is underpinned by strong customer retention and high entry barriers, arising from the core nature of industrial gases and the structural rigidity of long-term pipeline contracts.
India's industrial gas demand is projected to reach $1.75 billion by calendar year 2028 from $1.3 billion in 2024, growing at a Compounded Annual Growth Rate (CAGR) of 7.5%, which provides a favourable
Ellenbarrie has already increased its capacity by 4.5x over financial year 2023-2025 to 3,870 tonnes per day, and has intentions to scale the same to 4,630 tonnes per day b financial year 2027. The company also sees future opportunities in electronics through high purity gases.
All of these factors, along with the company's capacity expansion in key clusters positions the company for stable growth and margin expansions, Motilal Oswal said.
"We expect
Motilal Oswal also expects a 39% revenue CAGR, 49% EBITDA CAGR and a 52% Profit After Tax CAGR for the company over financial year 2025-2028.
Dependence on key customer relationships, prolonged disruption in facilities and slower demand in key sectors like
For its bull case, Motilal Oswal has a price target of ₹836 for Ellenbarrie, which implies a potential upside of 60% from Friday's closing levels. Here, it is assuming a revenue CAGR of 45% over financial year 2025-2028 led by faster penetration in newer geographies. EBITDA margins are likely to expand by nearly 990 basis points to reach nearly 45% by financial year 2028, led by better realisations, improving product mix and favourable operating leverage.
Shares of Ellenbarrie Industrial Gases are trading 3.1% higher at ₹540. The stock trades above its IPO price of ₹400.
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