Ellenbarrie Industrial Gases Limited Q3 FY26 Earnings Call Summary

Summary

Ellenbarrie Industrial Gases Limited - Q3 FY2026 Earnings Call Summary Tuesday, February 03, 2026 4:00 PM

Event Participants

Executives 3 K Srinivas Prasad (CFO), Padam Kumar Agarwala (Chairman and Managing Director), Varun Agarwal (Joint Managing Director)

Analysts 3 Ashish Parikh (Private Investor), Devika (Unknown Firm), Prashant (Unknown Firm), Shubam Todi (Unknown Firm), Vatsal Bhandari (Unknown Firm)

Financials & KPIs

Geographic & Segment Commentary

• East India: Performance impacted by oversupply of Argon from captive steel plants and general softness in the metals sector. The recently commissioned Uluberia 2 merchant plant (220 TPD) is currently in the ramp-up phase with an 85% utilization target within 18 months.
• On-site Segment: Demonstrates high resilience due to “take-or-pay” contract structures. While customer offtake saw sequential softness, fixed monthly revenue remains unaffected, providing a stable margin floor.
• Speciality Gases: Strategic focus on solar cell manufacturing in Western India. Management is targeting FY28 for the commissioning of a high-purity gas facility to cater to renewables and semiconductor sectors.

Company-Specific & Strategic Commentary

• Argon Market Dynamics: Realizations declined by >25% in Q3 due to a supply-demand imbalance. Management expects recovery as trade deals improve the macro environment for steel manufacturers.
• Capacity Expansion: Executing a ₹450 crore capex plan over two years. Key projects include East India on-site (320 TPD, Q1 FY27), North India merchant (220 TPD, H2 FY27), and West India speciality gases (FY28).
• Efficiency Initiatives: Upcoming plants are designed with superior power efficiency (the largest cost component). The company is also signing renewable energy contracts to optimize long-term power costs.
• Solar & Semiconductors: Actively winning contracts in the solar space, primarily for traded and debulked speciality gases. Semiconductor inquiries are nascent but represent a long-term strategic pivot.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Margin Sustainability

• Question: Can the company maintain the 40% margin aspiration given the Q3 dip? (Devika)
• Answer: Yes. Current 9M margins are at 36%. Future margins will be supported by more power-efficient new plants and a higher mix of on-site capacities which have superior margin profiles. (Varun Agarwal)

Argon Impact

• Question: What was the revenue mix and margin impact from Argon this quarter? (Moderator/Chat)
• Answer: Argon contributed ~10% of revenue. Realizations dropped by over 25% due to steel sector weakness, but management views this as non-sustainable and expects normalization. (Varun Agarwal)

Speciality & Solar Gases

• Question: How will you compete with Linde/Inox in solar gases since they have legacy contracts? (Vatsal Bhandari)
• Answer: While peers are larger, the massive capacity addition in solar allows room for multiple players. Ellenbarrie is focusing on a debulking and distribution model in the West, with margins likely in the “teens” as it is a traded product. (Varun Agarwal)

Execution Timelines

• Question: Why was the East India on-site plant delayed? (Moderator/Chat)
• Answer: It is a minor shift of a couple of months (to Q1 FY27). Greenfield projects of 15-month durations typically face minor 1-2 month variations due to construction challenges. (Varun Agarwal)

Key Takeaway

Ellenbarrie Industrial Gases reported a challenging third quarter, with Revenue from Operations at ₹81.3 crores and EBITDA margins compressing to 31.1% from 38% in the previous quarter. The performance was primarily hindered by a 25% drop in Argon realizations and sequential softness in the steel sector. Despite these headwinds, the company maintained its long-term growth narrative, commissioning the 220 TPD Uluberia 2 plant and progressing on a ₹450 crore capex plan across North, East, and West India. Strategic focus is shifting toward solar and speciality gases to diversify the revenue base beyond metals. Management reiterated a 20-25% long-term revenue CAGR and a 40% EBITDA margin target, predicated on the rollout of more power-efficient plants and stable on-site contracts. Investors should monitor the ramp-up of new merchant capacities and the stabilization of Argon pricing in the coming quarters.