Broker’s Call: Ellenbarrie Industrial Gases (Buy)
We maintain Buy as we expect EIGL to deliver revenue/EBITDA/PAT CAGR of about 32%/33%/30% over FY26-29E driven by: a 23% CAGR in merchant volume on account of strong capacity expansion
Ellenbarrie Industrial Gases (EIGL) has secured a significant contract with BHEL for the supply and erection of 1,200 tonne per day (tpd) argon-separation units (ASUs) for the construction of a 2,000-tpd coal-to-ammonium nitrate project in Jharsuguda, Odisha. The contract, worth ₹480 crore, is expected to be executed over two years and commissioned in FY29, contributing an incremental EBITDA of around ₹24 crore to the company.
This project aligns with the Government of India's National Coal Gassification Mission, which could enhance future order visibility from similar initiatives. As a result, the broker is raising EIGL's FY27-29E revenue by 18-43 per cent and EBITDA/PAT by 3-7 per cent. With a valuation rollover to September 2028E, the company's TP is now at ₹430 (previously ₹385), based on an unchanged 30x September 2028E P/E.
The broker remains optimistic, anticipating a 32 per cent, 33 per cent, and 30 per cent compound annual growth rate (CAGR) in revenue, EBITDA, and PAT for FY26-29E, driven by a 23 per cent year-on-year increase in merchant volume due to strong capacity expansion and improved merchant segment EBITDA margin to approximately 36 per cent in FY29E.
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